How do Insurance Policy Premium Payment Plans Work?

May 6, 2024
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Setting up a new insurance policy can feel like a lot of work and at times a bit daunting. Using an insurance broker helps, but there are still things that can be confusing sometimes even if you’ve had insurance for years.

Choosing between the various premium payment plans available can be surprising complicated – and we understand they can be confusing!

Typically, you have your total annual policy premium amount and from there have the option to pay in full (i.e. one pay), or pay over two, three, four, or possibly up to 12 different installments. Depending on the circumstances, there can be discounts to paying in full while almost always there are finance charges to pay in installments.

Remember too: any changes made to your policy that affect your premium will likely also have an impact on your premium payments.  For example, if you are paying your premium with monthly installments and along the way replace your vehicle with a newer model (resulting in additional premium on your policy), your remaining premium payments will likely be increased to account for the higher amount of premium on the policy. Note also that the additional premium will be equally spread over the remaining period of your policy term (e.g. your payments could be spread over two installments if only two months remain in your term).

In most cases, the insurance company controls the payment plan process and only they have the authority to make payment exceptions, changes, etc. If you need to request any changes or updates to your payment plan, be sure to connect with your Staebler Broker as soon as possible to discuss.  The more time we have to make changes to your payment information, the better!

Your First Installment can be Two, Three, or more!

In some situations, insurance companies may be experiencing delays in issuing their insurance policies. Rest assured that once coverage is confirmed bound by your broker that coverage is in place – however, there may be a delay before you receive your policy documents from the insurance company.

Depending on when your policy is set up, processed by the insurance company, and when the payment plan/schedule is released, you could be paying for more than one installment worth of premium.  In some cases, it can be the insurance company collecting payments that were not collected during the processing delay.  In other situations, payments may be delayed based on the bank’s processing time.

Rest assured, these higher first payments are often the insurance company “catching up” on delayed payments in the early months of the policy term.  When setting up automatic withdrawals for your insurance policy, be sure to keep an eye on your bank account – if the agreed upon installments are not being withdrawn, it could be that the insurance company (or your bank) is behind on processing the payments.  In those cases, you’ll want to be sure to keep that money set aside, as those amounts are due as soon as the policy is issued.

In some cases, insurance companies will bill two months in advance to ensure your account is ahead in payments in case there is an issue later in the policy term.

We know these premium payment details can be confusing.  Don’t hesitate to reach out to your Staebler Broker if you have any questions.

How will I know when my payments are due?

When setting up your policy, you will have several options for how and when to pay for your policy. You can find more information about these options here: Premium Payment Options – Staebler Insurance

As the insurance company controls the premium payment schedule, they will include a breakdown of the payments with your new policy. Some insurers allow for email delivery of documents so this may be an option for you. It is best to be prepared and ensure your bank account is sufficiently funded ahead of withdrawal dates.  Don’t be afraid to ask questions if you’re ever unsure!  We understand that payment details can be confusing, so reach out at any time.

What if I can’t make an upcoming payment?

If you require any changes to your payment plan, please provide as much notice as possible. Staebler Brokers recommend at least two weeks notice. Payment requests from the insurance company to the bank occur anywhere from a few days to a couple weeks, and in most cases the payment requests cannot be stopped or changed.

By providing as much notice as possible, it gives us the best chance to have those payment details updated for you in a timely manner.

Still have questions? Please reach out to a Staebler Insurance Broker with any questions, concerns, or if you think of anything else we can help with.

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Staebler Insurance is a general insurance broker specializing in car insurance, home insurance, small business, and commercial insurance. Staebler brokers proudly serve Kitchener, Waterloo, Cambridge, Guelph, Stratford, Listowel, Fergus, Elora, Wellington County, Perth County, Waterloo Region and southern Ontario. Get a Quote to get started today.

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