There are several ways to pay your insurance policy. For example, you can pay your total bill for the year in a single payment by cheque or credit card, or you can make pre-authorized payments. With this last method, your insurer automatically withdraws the amount of your premium each month from your bank account or credit card.
But what happens if your cheque or monthly payment “bounces” due to insufficient funds? Unfortunately, whether this situation is an isolated occurrence or repeated, it can have very negative consequences.
In fact, every day we receive calls from new clients whose insurance was cancelled due to non-payment of premiums. The independent brokerage firm Assurances Multi-Risques would like to caution you about this. Read on to find out more!
Cancellation of car and home insurance
After one or more direct debits dishonoured due to insufficient funds, your insurer may decide to cancel an insurance policy.
We want to point out that, in this regard, each insurer has their own policy. Some insurers may cancel your insurance policy at the first direct debit dishonoured for insufficient funds, while others will cancel it after two or more.
Also, a long-standing policy-holder with a clean record (no non-payment incidents on record in the past) is less likely to have their insurance policy cancelled. It goes without saying that if you are a loyal customer with a clean record, your insurer will be more lenient with you. Your history with your insurance company has a significant impact.
And for people who make a single payment by cheque or electronic fund transfer, we strongly recommend that you pay your insurance premium upon receiving your policy to avoid an unfortunate oversight!
Cancellation and time frames
When an insurer cancels a customer’s insurance policy, they give them 30 days to find a new car insurer and 15 days for home and/or business insurance.
And our experience has shown that finding a new insurer after this type of misadventure can prove complicated and difficult!
Will your insurance premiums be higher after cancellation for non-payment of premium?
Cancellation of insurance for non-payment of premium with a former insurer inevitably leads to an increase in car, home or business insurance from a new insurer. The new premium may be double the previous one—even triple in some situations!
It is also highly likely that you will have a lot of trouble finding an insurer who will agree to insure you after this type of incident. We recommend that you contact an independent insurance broker, an expert in cancellation for non-payment, because they are in the best position to guide you and point you to an insurer specializing in this specific type of case. By the same token, you’ll see that there are a lot fewer “substandard” insurers than regular insurers!
It’s also important to know that cancellation for non-payment of premium will stay on your record for 2 to 5 years, depending on the insurer.
In closing, AMR has a few tips for you:
- We strongly recommend that you avoid making false statements when you take out a new insurance policy because when there’s a claim, insurers conduct investigations, and if they find out that your insurance was cancelled for non-payment in the past, they will refuse to pay out;
- Avoid a gap in insurance coverage. If your car or home insurance company cancels your policy, contact a broker so that they can find you a new insurer quickly. If there’s a gap in your insurance coverage, your premiums will definitely be higher;
- If you have an unpaid balance with your previous insurer, pay it to avoid having a collection agency come after you and, in doing so, harm your credit record even more;
- Finally, monitor your pre-authorized payments. You’ll avoid a lot of inconveniences by being meticulous in this regard!
For additional questions or if you find yourself in such a situation, you can always contact us! As independent brokers, we’re here to listen to you and give you the best advice.
We can support you in the process to find a new insurer!