We explain what your rights are if you miss one car insurance premium payment.
Unless you benefit from a period of grace, if you have not paid your car insurance premium, you are not covered for that month. We explain why below. Times are tough economically and this can directly impact our car insurance premium payments."There was a rise in the average number of outstanding debtors’ days, to 53.5 days in the second quarter, from 52.5 in the first quarter."This shows an undeniable trend of rising financial strain," says Michelle Beetar, Managing Director of Experian South Africa.In other words, sometimes, there simply isn't money in the bank account to pay our car insurance premiums and other debit orders.However, the Ombud for Short Term Insurance warns that where cover wasn't paid for a specific month, no cover is in place. If you then claim the car insurance company will have a strong case to reject the claim. But there is normally a period of grace allowed, depending on what it says in your policy booklet.They explain your rights and risks when you can't make a payment on your premium.
Consumers firstly need to understand the period of grace
The Policyholder Protection Rules (‘PPR’) have introduced a safeguard to give consumers who fail to pay a premium a chance to pay. This is what you need to know about the rules for the period of grace.
The grace period may be 15 days or more after the agreed payment date but not less
Read your policy wording to see if the period of grace applies
The grace period applies from the second month after the policy starts
If the policy wording states that the premium may only be paid by debit order, the policy must explain how the premium must be paid during the grace period
However, where the policy wording does not set out the method of payment, then the insurer cannot refuse an offer by the consumer to pay the premium directly into the insurer’s bank account during the grace period
During the sales call, the period of grace will be explained.
If the insurer says they will double debit you in case of non-payment, the next month, it means that they are allowing one month's grace period
General principles where no grace period is allowed:
If no premium has been paid for a specific month, then there is no cover for that month
It is your responsibility to have sufficient funds to cover the deduction of the premium payment
The insurer does not need to notify you of a non-payment of the premium
Most policies contain an exclusion against cover if the consumer places a ‘stop payment’ on the premium
A stop payment is regarded as a cancellation of the policy by the consumer
Premiums are paid in advance, in other words, on the first day of June for cover to apply for the duration of June