Managing Insurance Payments in a Difficult Economy

by Alan Long of Eldredge & Lumpkin

The difficult economy is not just visible in the headlines but a reality that most of us face daily. Over the last several months we have seen many customers lose their jobs, retirees watch their income from stocks and pensions disappear and contractors lose jobs. These have had a very decided trickle down effect and, as a result, many of our clients are having difficulty keeping current on their premium payments.
Insurance assumes an unwanted connotation in times like these. It is an intangible that can prompt the reaction, why put my dwindling assets towards something that may not ever be used? Unfortunately, driving a car requires insurance, carrying a mortgage requires insurance and success in bidding for jobs requires insurance. So there is a need to find a palatable way to manage these payments. This is where your insurance agent will help.
A policy review with your agency’s customer service representative (CSR) will help determine if you have the most cost-appropriate coverage to fit your individual needs. The key is finding ways to make it work for you.
When you speak with your CSR before a cancellation occurs, you can actually save money and grief. Here’s why:

  • Each time you receive an insurance cancellation notice (even if you get your payment in before it is actually canceled) the company charges a late fee. These range from $20-$35.
  • If your policy is canceled because of non-payment – even for the first time – most companies will require a replacement policy to be paid in full up front.
  • If your policy is canceled and has to be rewritten, you will lose all grandfathered benefits; these may include preferred credits, loyalty credits and pre-insurance exemption status.
  • Losing a policy can be costly to the Cape Cod homeowner. We have seen companies decline to renew homeowner policies that have received too many cancellation notices.
  • Even though Massachusetts does not allow credit ratings to be used as a factor in setting insurance rates, the number of issued cancellations can affect the rate you receive.
  • Cancellations will affect your credit rating and have a ripple effect on your general credit standing.

Find easier ways to pay your bills. Getting organized can take away some of the stress and avoid late fees. Here are some suggestions:

  • Keep a list of your policies and their effective dates. Renewed policies require at least a down payment by the effective date.
  • Get a list of your installment dates. Most companies charge a fee from $4-$8 per installment. If you pay in 10 installments, you could be paying an extra $80 per year in installment payments for your insurance.
  • Pay the bill at a time of year when payment is easier to manage.
  • Pay bills online. Using the mail could result in late payments.Companies will consider your premium paid on the date they receive it at their place of business; afterward it is considered “late”.

Be sure to communicate with your agent and company. That’s the best way to save money and time on your insurance premium payments.

One thought on “Managing Insurance Payments in a Difficult Economy

  1. very nice article specially the Points
    for saving money. And also the suggestions to escape from late fees. Nice post i like it.

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