The Impact of Non-Payment on Your Insurance Coverage
At Merit Insurance, we understand that life can sometimes throw unexpected financial challenges your way. However, it’s crucial to be aware of the implications that non-payment of insurance premiums can have on your coverage. In this blog, we’ll take a closer look at how non-payment affects your auto and property insurance.
Automobile Insurance and Non-Payment
Automobile insurance in Ontario operates under a set of rules defined by the Ontario Automobile Policy (OAP 1). When it comes to non-payment of premiums, here’s what you need to know:
- Notice Period: In case of non-payment of your automobile insurance premium, the insurance company is required to provide you with a notice. If the notice is delivered in person, you’ll receive a ten-day notice period. If the notice is sent by registered mail to your last known address, the notice period extends to 30 days.
- Payment Deadline: The notice will specify that you have until noon of the business day prior to the last day of the notice period to pay the outstanding premium amount along with an administration fee. If you settle the arrears and the fee within this timeframe, your policy will remain active, and cancellation will be avoided.
- Cancellation: If the premium and administration fee are not paid within the specified timeframe, your policy will be automatically cancelled effective at 12:01 a.m. on the last day of the notice period.
- Multiple Non-Payments: If you’ve already received two notices of non-payment within the term of your policy and another non-payment occurs, the insurance company is not obligated to provide you with further notice. Your policy will be cancelled with either a five-day notice if delivered or a 15-day notice sent by registered mail to your last known address. Reinstatement of the policy will not be possible.
- Consequences: If your policy is cancelled due to non-payment, and you still require coverage, you’ll need to submit a new application. The cancellation due to non-payment will affect your premium rates going forward. Multiple instances of non-payment within a three-year period could lead to disqualification from the standard insurance market.
Property Insurance and Non-Payment
Unlike automobile insurance, property insurance regulations are not as standardized, and the policies regarding non-payment can vary between insurance companies. Here’s what to expect:
- Notice Period: In the event of non-payment of your property insurance premium, the insurance company is typically required to provide a notice. This notice may involve a five-day delivery notice or a 15-day notice sent by registered mail to your last known address.
- Reinstatement: Generally, property insurance policies may not be eligible for reinstatement after a non-payment, unless the insurance company agrees to reactivate the policy. If the policy is not reinstated, a new application will be required, and the non-payment cancellation will influence your premium rates.
- Impact on Qualification: Some insurance companies may choose not to offer coverage if you’ve experienced a non-payment in the past three years. This highlights the importance of maintaining a consistent payment history to ensure your eligibility for coverage.
Therefore, non-payment of insurance premiums can have significant consequences for both your auto and property insurance coverage. It’s essential to stay informed about the notice periods, payment deadlines, and the potential impact on your eligibility and premium rates. If you’re facing financial difficulties, consider reaching out to your Merit broker to discuss possible solutions or payment arrangements to ensure that your coverage remains intact. As part of our Merit Different and our one on one broker relationships, we’re here to help you navigate these situations and find the best options available to you.
