Over the years at Clinard Insurance Group,  helping people with their insurance needs, I have heard this question many times. It doesn’t matter if they are talking about auto insurance, home insurance, general liability insurance or workers compensation insurance, people still assume that there is some magical grace period that allows them to pay their insurance payment after the due date.   I’m not sure exactly where the terminology comes from but I think I have an idea where the concept arose. 

In NC, if you don’t pay your insurance policy when it is due, then the insurance company cannot just cancel your policy that day.  The law requires that they give you a legal notice of cancellation.  The time frame for this notice varies by policy type but it is generally around 15 days.  So, if your policy is due on the 5^th of the month and you don’t pay the bill on time, then somewhere around the 10^th of the month or so, the insurance company will send out a notice of cancellation on your policy.  This notifies you that if your money is not received by a certain date (here is the legal notice time frame), then your coverage under that policy will cease.

I think this notice period is what has led some people to believe that there is a “grace period” which allows them to pay their premiums after the due date.  But paying late and relying on this legal notice time frame is a dangerous practice for several reasons. 

First of all, the insurance company doesn’t have to accept your money after the due date and they can let the cancellation stand.  If you have had a loss during this time, you might not even be protected since in some cases (particularly on policy renewal dates) the notice of cancellation states that  the effective date for when protection ends is the same as the original payment due date.

Secondly, there is a growing trend among insurance companies to charge hefty fees for payments that are late.  Some companies charge as much as $35 to reinstate your policy after a cancellation notice has been issued.  These changes tell me that the insurance industry has decided that as times are hard and people are letting some bills slip a bit, they want to be first in line.  So if you are having some cash flow issues and think you might want to pay your insurance bill a little late, be sure that you understand all of the late penalties and fees that will apply.  You might choose to prioritize the insurance bill closer to the top of the pile.

There is a sure fire solution to prevent a late payment on your insurance policy and thus prevent lapses in protection and costly late fees.  Most all insurance companies can now take your payment on a monthly bank draft.  This means that they will draft the money from your checking or savings account on the due date automatically.  Of course this will fail if there is not enough money in the account to pay the bill, but for protection from forgetting or misplacing an insurance bill, this one could save you a lot of money.  At Clinard Insurance Group in Winston Salem, NC we try and make this option available to any an all of our clients who might be interested.   If you would like to know more about the specific fees your company charges for late payments, or if you would like to have your policy set up on bank draft, please call our office or visit us on the web at www.clinardinsurance.com.

The source information for this article was drawn from www.insuranceguy.com.

In North Carolina, there is an old loophole in the car insurance rates for young drivers which has technically been closed but with the right help, you can still put this to work for you and cut your auto insurance costs by hundreds of dollars each year.  At Clinard Insurance Group in Winston Salem, NC, we specialize in helping families with teen drivers and we know exactly how to make this loophole work for you.

In North Carolina, when you add your teen driver to your policy you will see your rates shoot up to levels that will shock you.  But the good news is that these super high rates don’t last forever.  During the 3 year “inexperienced driver” period the insurance company can surcharge your policy to account for the fact that teenage drivers have accidents more frequently and their accidents are typically more severe.

So how does it work?  Well, there are three different tiers, one for each year of experience that a teen driver has.  So, in your teenager’s first year of driving, he or she is in the highest rated tier and your policy is surcharged the maximum.  But after one year of driving, your teenager is technically eligible to be re-rated to the 2^nd tier, with lower surcharges. The third year of driving should find your teen driver in the least costly of these three experience period surcharges.   The problem is that the timing of your child’s experience may not correlate well with your policy renewal dates so  you might find yourself paying extra surcharges to the insurance company. 

Let’s take an example.  Assume your auto insurance policy renews on January 1^st and runs for one year.  Now let’s say you add your teen driver to the policy on February 1^st, the day she gets her license.   Immediately, the insurance company charges your policy with your daughter at the highest rated inexperienced operator tier.   You grumble, pay the extra money and hope your child doesn’t have an accident or get any tickets which will make all of this much worse.  The next year, on January 1^st, your policy renews and since your daughter is still in her first year of driving your renewal price still has the highest surcharge for an inexperienced driver.  Now on February 1^st of this second year, your daughter gains her first full year of experience.  So you would expect your rates to drop as she moves into the middle tier for inexperienced drivers.   But here is the rub:  the insurance company doesn’t have to move your daughter to the middle tier and refund some of the money back to you.  The law says that they can wait until the next time your policy renews,  which will be the next January.  In this case you would be overpaying the insurance company by nearly an entire year for the inexperience driver surcharge.

If you knew the dollar amount of overcharge and it happened to you, you would be sick about it.  On average, at Clinard Insurance Group, Inc we are able to save our teen driver families $387 per year by forcing the insurance companies to change the surcharge on the teen driver’s anniversary of his or her license.  How do we do it?  It is simple really.  Because we specialize in helping families with teen drivers we understand exactly which companies will allow the surcharge to be changed in the middle of a policy term. And because we handle so many teen driver families, the insurance companies that we use are willing to accommodate our clients.  If a company won’t allow this and the timing is bad, we will advise our clients not to purchase insurance from that company. 

So what can you do to avoid overpaying for your teen driver?   First of all, use an independent agent who understands the ins and outs of insuring families with teen drivers.  If you are having trouble finding an agent, give Clinard Insurance a call at 877-687-7557 or visit us on the web at www.clinardinsurance.com .  Secondly, during the years that you have a teen driver on your policy, always try to purchase policies with the shortest time frame possible.  Many companies will allow a 6 month policy and this can work to your advantage if your company refuses to adjust the inexperienced operator surcharges in the middle of the policy term.

If you would like more information about how to keep your young driver safe on the road, please visit our teen driver safety site by clicking here.