During difficult financial times, you may be forced to make hard choices. You know you need a NH car insurance policy or perhaps a business insurance policy in the long run, but what is the real harm in letting the policy cancel for just a little while so you can get caught up with your bills? A lot more than you think!
As risk managers at HPM Insurance, we would never suggest that anyone go without insurance given financial disaster can strike at any time. Putting this huge reason aside however, there are many other reasons why you want to do everything you can to keep your insurance in place:
It will cost you more money if your insurance cancels for nonpayment
Depending on how long your insurance policy has been cancelled, and the type of insurance, your options to secure new coverage may be severely limited. At HPM Insurance, many of the 10+ homeowners insurance companies we represent will not simply charge a slight fee for cancelling, but out-right refuse to re-write it. This may force us to go to the non-standard market which is typically two to three times the cost of the standard market with a fraction of the coverage options available.
In New Hampshire, no car insurance company can out-right refuse to write the insurance for a legal resident of NH. That said, the company is allowed to place a risk in a more expensive rating tier. Non-continuous car insurance is a huge factor in how a premium is determined and it will definitely cost you more than it would have before any non-payment issues.
Cash flow issues
If your policy cancels for nonpayment, your insurance professional may be able to convince the insurance company to re-instate the policy if not too much time has passed. If so you would have to sign a statement swearing that there has not been a claim during the lapse period and may have to pay the balance in full. This will hardly help with any cash flow issues you may be experiencing.
Fees, fees and more fees
Insurance companies charge a monthly installment fee on any bill issued. If a second bill is forced to go out due to nonpayment, there is typically an additional $10 - $25 fee applied. Some insurance companies even charge a re-instatement fee in addition to the cancel and installment fee.
Loss of prior coverage
It is not uncommon for an insurance company to roll-out a new program to attract new business. When this happens, it is typical for the company to require all new business be written in the new program, while keeping current clients in the grand-fathered program.
If a client cancels for non-payment and they were perfectly happy with the coverage and price in the old program, it will no longer be available to them should they need to be re-written.
Loss of income
Many contractors know that to get on a job site they will be required to show the general contractor a certificate of insurance proving a commercial policy is in place. We typically get this request at the start of a job, but it is not out-of-the-question to get the request after the job is complete. If a policy has cancelled for nonpayment during the period of the job, your insurance professional can not issue the certificate, and thus the contractor does not get paid!
What You Can Do
At HPM Insurance we see policies cancel for nonpayment for two reasons:
1. Lack of Funds
2. Forgot to Pay Bill
Though we can not directly help with your income, we would suggest that you call your insurance professional before the policy cancels to see if coverage can be reduced for the short-term or perhaps there is some flexibility in the due date. It never hurts to ask.
If you are not able to stay on top of your bills due to time constraints we would strongly suggest you sign-up for electronic fund transfer. This automates the process so you need not worry about getting or paying your bills. For more information on this, please read a recent HPM Insurance blog called New Year's Resolution 2013: Save Money.