Life gets busy sometimes. It’s not surprising you might forget to pay your insurance premium. But what does that mean for your coverage? Some insurance is optional, but some — like auto — is mandatory. So, the last thing you want is a cancelled policy.
Thankfully, you might not need to panic. You usually have time to get caught up on your missed payment by virtue of the insurance grace period. But the late payment has repercussions, and the details of those depend on your insurance contract.
Finding the Grace Period
You can find the specific grace period for your insurance outlined in your policy. According to the Insurance Bureau of Canada, a grace period is the time after a premium is overdue during which you can pay the premium without a penalty. Your policy is not suspended, nor is it cancelled during this time.
Your Rights as a Consumer
Some kinds of insurance, like auto, are closely regulated. That gives you some rights when it comes to grace periods. In Ontario, the Auto Insurance Consumers’ Bill of Rights says you have the right to keep your policy within 30 days of one or two rejected automatic payments for non-sufficient funds. This may make you think you have 30 days to get up to date but read that closely — the right applies to non-sufficient fund situations only. It may not protect you if you pay premiums manually. It also usually only applies to automotive coverage.
So before relying on the law, it makes good sense to just talk to your insurer if you have missed a payment or know you won’t be able to pay the premium. The company may help you make arrangements to pay, without affecting your coverage.
How a Late Payment Increases Costs
The grace period may help you keep your insurance. However, that doesn’t mean your costs won’t go up. Many insurers charge late fees or increase your monthly premium amount after a missed payment. Your insurer can explain this to you. The details should also be listed in your policy.
When Your Policy is Cancelled
Sometimes, life happens, and you are just unable to catch up on your premium. After the grace period, the insurer may choose to cancel your policy. In the case of something like auto insurance, that means you can’t drive until you arrange for appropriate coverage. However, even after a policy cancellation, your insurer may let you reapply for the same coverage. Whether it’s auto insurance or another type, the company may allow you to reinstate a cancelled contract upon request. This may cost you more, but you’re covered.
Your Options for the Right Insurance
It’s good to know you may be able to get your old policy back after a cancellation. But it may also be a time to reassess your coverage. If your premiums were unaffordable, perhaps you need less coverage. You may want to shop around for another insurer that will give you a better deal. You can review your options for insurance and other financial products at RateSupermarket.ca. That way, you’ll know what else is out there for you.