Featured Question: If I miss a car insurance payment, am I still covered?

By Staff Writer
Santie Stevens, short term insurance manager for InsuranceBusters answers the reader's question:
This will depend on whom you are insured with, but most insurers will give you a 15 day grace period to pay the premium. Systems automatically re-debit your bank account 15 days after they (the insurer) is informed by the bank that the premium was unpaid due to insufficient funds.
A few insurers will allow you to make a manual payment into their bank account, but do not prefer this route as this causes huge administration problems if the client forgets to forward the proof through of EFT or manual payment made to the insurers bank account.
If the money is not received 15 days after agreed date, there will be no cover for that month. There are one or two insurers in the market that will however do a double debit the following month. The cover is then subject to both premiums being received. In these cases should a claim arise; the claim will be placed on hold until proof is received that money was paid.
Where the insurer does not receive a premium within the 15 day grace period, the policy will go into a state of cancelation and should a claim arise, you will have no cover for that month. If the following month's premium is again unpaid by your bank for the same reason another 15 day grace period will be given and if the premium again goes unpaid the cover will cancel back dated to the last month of the premium received. It means you would be uninsured for two months and all discounts that may have been given can be lost.
It is important to understand that insurance cover works on a calendar month irrespective of the debit order date of the premium, which is normally on the 1st working day of each month.
If you pay your premiums on the 15th of every month, it is still to provide cover for the month you are in. If you pay premiums anytime from the 20th onwards it is normally for the month to follow.
The following will result in your insurance cover being back dated to the last month premium received:
  • -No authority to debit
  • -Stop payment
  • -Account closed
The consequences of your insurance premium not being paid over to the insurer on the agreed date may result in your ITC scoring being effected, which in turn can cause increased premium for the future. Many insurers will not offer you a quote in the future either. Also your current insurer may refuse to re-instate your cover with them.
The onus is on the client to ensure that sufficient funds are available in their account for the debit order to be paid over and for the client to enjoy cover for any unforeseen incidents that may cause rise to a claim.
The best advice we can provide is to always make sure you leave about R20 more than the actual premium as debits are done electronically and if you are even one cent short on your account the premium will not get paid over and the bank will charge you a fee for the unpaid debit order.
Open a separate account only to be used for your debit orders. Make sure two days before the debit order has to go off that you have sufficient funds available in your account.
Check your account to make sure it was paid over. If you notice a problem contact your broker immediately or your insurer. Remember that if your debit order date you and the insurer agreed upon for deduction falls on a weekend or public holiday that it may only go through on the 1st available working day thereafter or before.
Even though insurers do try to assist you by giving you a 15 day grace period to pay for your cover, your claim may be repudiated due to no premium being paid.

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