You are here:
- Home
- Autos
- Auto Insurance
- Auto Insurance Claims
- Insurance Coverage Lapse
Auto Insurance Claims/Insurance Coverage Lapse
Advertisement
Question
A friend was in a minor car accident (his fault). After filing a claim through the company's 800 number, he was informed that his policy had lapsed (due to late payment). Payment was late by no more than one week. All other premiums had been paid in a timely manner for approximately 5 years. After speaking with his agent directly, the response was that there was nothing he could do and that they could not cover the repairs.
This just doesn't seem right. Isn't there a grace period or application of late fees before a policy is just dropped? Is there any other recourse my friend can take?
Thank you. I appreciate any insight you may have.
Nope.
We're talking about an insurance policy. He pays and they cover. He quits paying and they quit covering. There are no grace periods.
Yes, other businesses do extend grace periods or apply late fees. But think about it. What is a stake? A $200 power bill? A $500 credit card balance? What they are really extending is just a little more time and credit.
By extending a policy past the payment due date, the insurance company is putting the entire policy limits at stake.
Big difference.
Insurance is always paid for up front. You may get a binder on the day that you put out the down payment, but the second that you are not paying for the coverage the next month, the coverage no longer exists.
There is something that your friend is not telling you. Because insurance is always paid for up front, being a week late will not leave you without coverage. The reason is that the due date is much more than a week before the previous period of coverage that was paid for has been reached. The systems automatically generate a warning that the payment hasn't been recieved at least 10 days "before" the coverage actually expires. To get to the point of no coverage, the payment usually has to be several weeks late.
Related Articles
Answers by Expert:
webfoot
Expertise
Auto damage, liability, insurance fraud. I am a full time auto insurance adjuster with experience in collision, theft, liability and fraud investigation. I am also an ASE Master Auto Tech and I-Car Collision Platinum certified. My experience includes 15 years in the auto repair industry, a B.S. in Criminal Justice, Law enforcement and auto insurance. ****** NO "PRIVATE" QUESTIONS WILL BE ANSWERED. I HAVE FOUND THAT NEARLY ALL PRIVATE QUESTIONS COME FROM PEOPLE WHO ARE CONSIDERING OR ATTEMPTING TO COMMIT FELONY INSURANCE FRAUD AND I'M NOT HERE TO HELP YOU! ****** I AM HERE TO ANSWER AUTOMOTIVE REPAIR, CLAIMS PROCESS AND SOME SIMPLE LIABILITY QUESTIONS. I CANNOT ADDRESS COMPLEX LIABILITY SCENARIOS WITHOUT HAVING ALL OF THE INFO FROM BOTH SIDES IN FRONT OF ME. QUESTIONS ABOUT PREMIUMS OR HOW INSURANCE IS RATED SHOULD BE ADDRESSED TO YOUR PERSONAL INSURANCE AGENT WHO KNOWS A WHOLE LOT MORE ABOUT YOUR HISTORY THAN I DO. I'VE NEVER SOLD INSURANCE AND DO NOT KNOW IF YOUR INDIVIDUAL INSURANCE RATES WILL GO UP IF YOU MAKE A CLAIM. THOUGH I'VE HANDLED SOME VERY MINOR SOFT TISSUE INJURY SETTLEMENTS, I PREFER NOT TO ANSWER INJURY RELATED QUESTIONS. I'M NO INJURY EXPERT AND I'LL LIKELY SAY SOMETHING TO HURT SOMEONE'S FEELINGS AS I BELIEVE THAT MANY SOFT TISSUE PAIN AND SUFFERING CLAIMS ARE OVER DRAMATIZED. UNLIKE MANY OTHERS, I AM ON THIS FORUM AS A VOLUNTEER WITH NO PRODUCTS OR SERVICES TO SELL AND PROMISE AN UPFRONT ANSWER BASED ON MY EXPERIENCE IN BOTH SIDES OF THE INDUSTRY. IF YOU PROVIDE ME WITH A HONEST VERSION OF EVENTS, I PROMISE A CANDID AND HONEST ANSWER IN RETURN. I CANNOT ADDRESS ALL CLAIM SCENERIOS DUE TO DIFFERING STATE LAWS AND REGULATIONS, BUT WILL DO MY BEST. PLEASE REMEMBER THAT AN HONEST ANSWER MAY BE ONE THAT YOU DON'T LIKE SO IF THAT IS GOING TO BE A PROBLEM, PLEASE DON'T ASK THE QUESTION. LASTLY, I DO NOT ACCEPT RATINGS AS I DON'T DO THIS FOR RATINGS AND WISH TO SPEAK FREELY.
Experience
20 years in automotive industry, Currently in insurance claims, worked actively as technician and shop owner until about 10 years ago. Current ASE Master Auto Tech and I-Car Platinum Collision Certifications, B.S. Criminal Justice and 10 year auto insurance/extended warranty background
©2012 About.com, a part of The New York Times Company. All rights reserved.