If I'm an insured who didn't pay the monthy insurance premium, can the Insurance company sue me, or just terminate the policy? Cite you referrences please...
2007-02-25 22:37:49 · 5 answers · asked by Lawrence of Arabia 6 in Business & Finance ➔ Insurance
Insurance contracts are what is known in contract law as a unilateral contract. That means only one party can be held liable for any part of the contract. That part is the insurer. The insured can not be held liable. Their only responsibilty is to pay the premium and they can not be forced to do so. Coverage ends when the premium is not paid.
2007-02-26 01:00:11 · answer #1 · answered by deep5223 4 · 0⤊ 0⤋
If this is car or home insurance, the minimum number of days the company gives for a cancellation notice is 10 days. Some states give more - my state gives 15. If you are on monthly installments, once the policy cancels you may owe what is called an earned premium (this happens mostly on monthly installments, sometimes it happens with quarterly but not as often). Earned premium is the premium due to the company for the number of days coverage was provided but not paid for. Put simply if your premium is $100 per month due the 1st of the month and you didn't pay this month and the policy cancels on the 15th - you would owe $50 earned premium for 1/2 a month's worth of coverage. If you do not pay the earned premium (company will send you a bill for it after the cancellation is processed), they will send you a warning letter - stating something like if this is not paid by a certain date, it will be sent to collections. Once it goes to collections, it will affect your credit. If your policy is with Progressive, they have a $40 (at least in my State this is what it is, could be different elsewhere) cancellation fee - which they do add to policies that cancel for nonpayment.
My reference is being an insurance agent and knowing how it works.
2007-02-26 00:41:57 · answer #2 · answered by Sue 6 · 0⤊ 0⤋
In the U.S., if you don't pay, say your Auto insurance, the company gives you a 30 day notice of cancellation for non-payment of premium. Then you get canceled.
Actually, most policies in the U.S. have a 30 day grace period where you can pay the premium with no lapse in coverage.
I can't cite references. I just know.
Read your policy. There should be a clause in there someplace that talks about premium payments and what happens if you don't pay, how much grace period you have, etc.
2007-02-25 22:44:18 · answer #3 · answered by Faye H 6 · 2⤊ 0⤋
If you have a whole life policy and don't pay your premium, the company may begin using the value inside of the policy to keep it going until it cancels itself out. If it is a term policy, it will cancel immediately at the grace period. If you have trouble paying monthly you may want to change to paying quarterly, semi annually or annually so that you don't lose coverage.
2007-02-25 23:12:38 · answer #4 · answered by Venita Peyton 6 · 1⤊ 0⤋
What kind of policy is it? And where do you live? Laws and regulations vary by state/country, and policy type.
2007-02-26 00:23:31 · answer #5 · answered by Anonymous 7 · 0⤊ 0⤋