I Can’t Pay My Monthly Car Insurance Premium!
Finding oneself in the position where your car insurance premium debit order bounces due to insufficient funds in your account is not uncommon.
With so many South Africans facing increased financial pressure in the current economic climate there comes a time when something has to give.
What is the best way to react in this situation and what are the implications of not paying your insurance premium this month – no one can afford to be without a car especially in a country that lacks great public transport facilities.
Contact Your Insurance Provider About Your Car Insurance Premium Default
While it might be more tempting to feign ignorant bliss as your insurance premium bounces month after month, it is better to let your financial advisor or insurance company know.
It may be a once-off situation, or it may be more permanent due to job loss.
Either way, they are best-placed to advise you on how best to move forward on how to deal with covering your monthly premium.
What Did You Sign? Understand the Fine Print
The consequences on non-payment of your insurance premium differ from one insurance company to the next. Most companies allow you up to three months grace to catch up with your car insurance premium (provided they are risk-only policies), but you do run the risk of your cover lapsing.
If you fail to pay your outstanding premiums at all during this grace period, your cover will likely lapse from the date of your last premium payment.
Missing a Car Insurance Premium Payment Might end Your Policy
Bear in mind that if you decide a few months later to re-instate your cover and start paying your car insurance premium, you will most probably have to take out a new policy, typically with increased premiums.
If you have a life type insurance policy (i.e. where there is a savings component to the premiums), your premiums might be drawn from the investment value of your policy – while the value of your policy will decrease, at least your cover and policy will stay intact.
Some insurance companies also allow you to apply for a 12-month ‘break’ from paying your car insurance premium but this does not generally apply to car insurance premium payments. You will lose your cover during this time but your policy will remain in place.
Don’t Cut this Cost
It might be tempting to let your car insurance premium be the one that ‘bounces’ when you’re in a tight spot. The benefits of buying groceries are more tangible than the value of paying a car insurance premium or even premium on a medical aid policy.
However, if you consider the risk cost, as well as the associated costs of getting a new policy, it’s just not worth letting your car insurance premium ‘bounce’
You can try to reduce your insurance costs by paying them upfront, and receiving a substantial discount (not the nicest way to spend your annual bonus, but certainly sensible), or even shopping around for a better deal.
If you choose this last route, remember to consult a qualified broker and to not mistake price for value! A lower car insurance premium generally means less cover.
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