Insurance protects you or your belongings against any danger or risks in case circumstances may arise such as during loss or damage. Some insurance policies can be secured by law while others may be a part of a contract like when taking out a mortgage.
Different insurance policies may vary in terms and conditions that dictate what can happen in case you fall behind payments or when you terminate the contract or cancel. There’s a possible cancellation fee for terminating the policies or when cancelling the service early. Some may even result in breaking the law if you don’t take policies to secure your property or possessions.
What Happens If I Fall Behind With Insurance Payments?
If you falling behind payments on your insurance contract, your provider will normally inform you to keep the payments up to date. Otherwise, your insurer will compel to cancel the policy. When this happens you’ll be uninsured and potentially be at risks.
If you’re on arrears, you’ll receive a notice of default. This can occur soon after you’ve failed to make payments on your policy. You’ll be given 14 days to settle your arrears or pay the remaining amount of the contract. If don’t pay at the time requested, your insurer is likely to cancel the policy.
When your policy is cancelled, your arrears will be administered through the process of debt collection for unprotected debts. This might cost additional charges in return.
What happens when insurance is cancelled?
You can be at risks once you can cancel the policy. However, this will depend on the type of insurance. In some instances, you may break the law when you prefer to cancel it.
When the insurance is part of the contract, this can result to breach of contract. This is usually seen in cases of mortgage insurance. Also, it is against the law if you do not insure your vehicle. This means you have to satisfy a certain requirement once you got a vehicle.
Moreover, the terms and conditions of the insurance policy differs. These terms imply the consequences that can occur when you cancel the policy or when you fall behind arrears.
Type of insurance
Consequences when Policy is Cancelled
|There is an early cancellation fee that can be charged by the company. You will have to pay the remaining payments if your policy is paid through monthly instalments
Without an exception, driving a vehicle without any insurance is against the law.
|Buildings Insurance||It is compulsory t have building insurance as dictated under the law if you own a property. This is the reason why mortgage has toe be protected or insured. Depending on the type of your policy, you may have administration charges along with the other expenses.|
|Travel Insurance||Insurance policies for travel are normally settled one time. Hence, the cancellation fee might be unusual. However, it’s much better to check your terms and conditions rather than be surprised by the unexpected costs.|
|Income protection insurance, Critical illness insurance, Life Insurance||Usually, you’ll get an early termination fee but this does not apply in all circumstances. You must revisit your terms and conditions and scrutinized the details.|
|Public liability insurance, professional indemnity Insurance and the alike||If your job requires for an insurance policy or when you own your business, cancelling your insurance might jeopardize you’re working safety and security.|
Dealing with Delayed Insurance Payments
If you have arrears on your insurance policy or when you can’t afford payments, you must deal with it before it gets worse. You have to weigh the consequences of cancelling the policy will impact you severely.
Once your insurance is cancelled, your creditor can take further action on your arrears. This includes getting a debt collection agency to deal with your debts or taking court action to recover what you owed.
Paying Annual Insurance Costs
If you’re paying insurance policy annually as a one-time payment, there’s nothing to worry until your due again. This allows covers you for the entire year.
Moreover, paying insurance policy annually can be cheaper since you’re paying without the interest. Thus, paying your policy annually is often times ideal.
After you’ve cover payments for the year, you can start setting aside money for the next years payments. You can divide the total amount you’ve paid for the whole year into 12 to come up with the target amount that you need to save each month.
Insurance Debt Help and Advice
If you find it hard to cope up with you insurance arrears or you’re worried on how you can deal with your debts, we can help. Our online debt advice tool can help you determine realistic means to deal with your debts. You can also speak with our debt advisor on 0800 193 1024.