Have you heard the expression “A debt paid is a friend kept”? This proverb is equally applicable when it comes to your insurer. Failing to pay your insurance company may have serious consequences—not only with your insurer, but for your overall credit score.
How Will Failure to Pay Affect You?
Failure to pay will have an impact on your insurance premium. Your financial institution will charge you fees for your not sufficient funds cheque, but it will also charge the payee—either the insurer or broker. For the same payment, you may have to pay about $80 in fees in addition to the amount of your monthly payment. In such a case, the amount of your payment for that month could be two or even three times the amount of your usual payment. Afterwards, your insurer may require that you pay the entire premium up front in order to issue or maintain your insurance policy. If you are unable to comply with the required conditions, your policy may be cancelled due to “non-payment of premium.”
Following a cancellation resulting from failure to pay, insurance companies that offer regular premiums with full coverage will no longer want to insure you. We would then have to turn to specialized companies that accept so-called “high-risk” clients. The issue is that the cost can increase by two to three times the cost of a regular premium, and the policy will have reduced coverage and higher deductibles.
The problems don’t stop there. When an insured person’s policy is cancelled for non-payment of premium, the person’s file is sent to a collection agency to seek payment for the balance. Credit agencies are also informed. When you attempt to borrow money to purchase a home or car, you will notice that your overall credit score has been affected. You may be given a higher interest rate, or your loan application may even be rejected.
In short, it is important to respect your payment agreements with all of your providers. If you are one of Lareau’s clients, you can speak to your broker to decide on a payment agreement and spare yourself all of this trouble. If you have had issues with an insurer or another broker, contact us, and we can help you find a solution!