What is an Insurance Grace Period?
During times of uncertainty, it’s not uncommon for people to fall behind on certain payments, and insurance is often one of them. If you’re worried that your insurance company is going to penalize you or cancel your policy because you’re in arrears, you’ll be relieved to hear that there’s a grace period before any action is taken. Here’s what you need to know about the insurance grace period in Ontario.
What is a Grace Period?
A grace period is the time a payment in arrears can be made without penalty. In Ontario, for instance, the period for auto insurance is 15 days by mail and five days in person. For new vehicles, the grace period is 7 days. This means that every insurer in the province is required to give customers sufficient notice before they cancel their policy. During the grace period, your insurance will remain in effect.
What if I Can’t Pay?
Talk to your insurance broker. Many providers will offer flexible payment options to their customers in order to help them bring their payments back up to date. While late payments often have associated penalties, some insurers may waive these, especially if it’s your first time falling behind and you have a legitimate reason. The same applies if you demonstrate intent to make all of your future payments on time. In other words, everybody makes mistakes, and many insurance providers are more understanding than you might think!
Will this Impact My Premiums?
It can. Late payments can push you into a higher risk category that, naturally, is associated with higher premiums. This is more likely if you have several NSF (insufficient funds) occasions on your file, which may stand out as red flags to insurers.
What Happens if My Insurance is Cancelled?
Certain insurance policies are mandatory in Canada. Sometimes it can be financially unfeasible to comply with established terms as time goes on, especially given the current situation the world is facing, but you don’t have to face this alone. If your current provider cancels your policy due to your inability to pay, our team at MLS Insurance can immediately step in and help to rectify any complications. We will attempt to remedy the situation and, if necessary, arrange for a new insurance policy within your budget.
Do I Still Have to Pay if the Insurer Cancels My Policy?
Yes. Even if they cancel your policy, you will still need to pay for what you owe. If you ignore the requests and they respect the agreed-on terms and conditions of your policy, the insurance company will send your file to collections. This can significantly damage your credit rating.
Other Instances Where the Grace Period Applies
If you change your car ownership or replace your vehicle with a new one, you are required by law to tell your auto insurer. While this could affect your insurance rate, if you fail to do so within the grace period of 15 days, you risk not being covered in the event of an accident. Most other types of insurance, such as homeowner’s insurance, will also have a grace period to ensure you can bring your payments up to date. Regardless, it’s always wise to review your contracts’ terms and conditions to understand what the grace period is for each of your policies.
Our team at MLS Insurance is here for you, every step of the way, when it comes to your insurance policy. This includes grace periods, and we’re happy to address any questions or concerns regarding your contracts. To learn more, reach out to us today. Alternatively, file a claim online with us for assistance from our insurance experts.