What to do if you can't make your insurance premium payments
Insurance is an important financial product. It helps minimize financial losses if you have an unforeseen event. However, that protection comes with a cost in the form of insurance premium payments.
If your car is stolen, insurance can help replace your vehicle. If you have a flood in your home, insurance can help you manage the costs of cleaning up the mess, as well as repair or replace your personal items. Having home and auto insurance can provide peace of mind. But what happens when you can't afford to make your insurance premium payments? Here’s what you need to do:
Contact your insurance company right away
If you receive a notice that your insurance payment has lapsed, it's a good idea to contact your insurance company as soon as possible. The rules vary amount different insurance providers, but some try to process the payment again within five business days. During that time, you are still covered. Some companies even allow coverage to extend for an additional 15 days until the payment is made. With some companies, though, your insurance is cancelled right away.
Communication is key in situations like this. If you let the returned payment linger unpaid, it could have long-lasting financial repercussions. Unpaid bills can have a negative effect on your credit score, as well as make it very difficult to obtain a new home or auto insurance policy in the future. Working something out with your insurance company can prevent the worst consequences.
Don't drive without insurance
Car insurance is required by law in all provinces across Canada. If your insurance payments lapse and you find yourself without valid insurance, you shouldn't get behind the wheel. It may take a few days to contact your insurance company, pay back premium amounts that are in arrears, and set up a new payment method to get your auto insurance back in good standing.
Until that happens it's best to stay off the road and find alternative modes of transportation. Consider taking the bus, car pooling with friends, walking, or riding a bike. According to Ontario Traffic Tickets the fine for driving without car insurance is $5,000. That's a hefty price to pay on top of your car insurance premiums.
Set up new payment instructions
The reason for the payment being returned may be an honest mistake, such as you changed banks or your credit card was stolen. Unfortunately, the insurance company probably won't care about that. It's best to contact your insurance provider and set up a new payment method as quickly as you can so you can continue insuring your home and automobile.
If you closed your bank account or changed financial institutions, you should visit your bank as soon as possible to obtain new pre-authorized payment information. Send this information to your insurance company and authorize the company to take the past due payment, as well as all payments in the future.
If you have a new credit card number, contact your insurance company and provide them with the new information. Do whatever it takes to get your home and auto insurance policies back into good standing.