Frequently Asked Questions
34
Due to nancial difculties, I sent my insurance payment a few days
late and the policy was canceled. My company did not notify me that
the policy was canceled; they just sent my check back. Isn’t there a grace
period during which the company must accept the payment?
There is no “grace period” for policies that have lapsed or terminated.
Under current regulations, companies must provide notice of payment
due dates according to what type of payment is due. Renewal offers
must be mailed 30 days prior to the due date. A cancellation notice for
nonpayment of premium must be mailed at least 15 days prior to the
expiration of the policy. If you do not pay your renewal premium or the
premium due amount on a notice of cancellation by the date specied, the
company is not required to once again tell you the coverage has lapsed,
nor to offer to reinstate your policy. While insurance laws require that
an insurer must be able to provide proof that a notication was mailed to
the address where you have told them you reside, they are not required to
mail any notice “certied” or “return receipt” and are under no obligation
to ensure that these notices are received.
Why do insurers charge young males more than young females?
Insurance rates are based on statistics and probability. Historically,
statistics have shown that, while males as a group have only a slightly
higher percentage of accidents and violations than females, accidents
involving youthful male drivers cause substantially higher amounts of
damage and cost the insurance companies considerably more in claim
settlement costs than accidents involving youthful females. Therefore,
insurance companies are permitted to set rates based on the overall risk of
the policy being written.
My son has received his driver’s license and our family now has two
cars and three drivers. My son is listed as an operator of my car on our
insurance policy, but my son is not allowed to drive my car; he uses
his mother’s car. How can I remove him from the rating of my vehicle?
The Named Driver Exclusion endorsement is available for the
Comprehensive and Collision portion of Standard policies. This
endorsement allows certain licensed drivers within the household to
be excluded from the rating of comprehensive and collision costs of a
particular vehicle on the policy. If you own vehicles that your child(ren)
does not operate, this may help save premium dollars. However, it should
be remembered that if the excluded driver does, for any reason, even in
an emergency, operate that vehicle there would be no coverage afforded
for repair to the vehicle in the event of an accident. (See page 6.)
Why Was My
Policy Canceled?
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What if I don’t pay my premium?
If you don’t pay your insurance premium, the company will cancel your
policy. Getting a policy from another insurer may be difcult or may
cost more if you let your policy lapse and go without insurance. A lapse
exceeding 30 days could place you in the assigned risk market. (See
page 9).
I sent in my insurance payment on the due date, but the company said
it was too late and still canceled my policy. Can they do that?
Whether or not a policy is terminated for a late payment depends on
what type of payment is due. Most companies will allow policyholders
to make installment payments on their premiums and may even accept
these payments received after the initial due date. This is permissible
because a policy is already in force and there may be equity (premiums
already paid) available to continue coverage for a short time. However,
if no payment is received, the company will issue a notice of cancellation
for nonpayment of premium. If this payment is not received before the
due date, the policy will terminate. Until the initial payment for a policy
renewal is paid, there is no policy in force. Therefore, when the renewal
payment is not received by the due date, the previous policy expires and
the offered policy does not become effective. Should the policyholder
wish to continue coverage with that company, the company would then
need to write a new policy for that customer.
I got a notice that said I had to make my overdue premium payment
or my policy would be canceled on the 15
th
. I
took the money to my agent on the 15
th
,
but they said it was too late and the
policy had already been canceled.
How can this be?
Because an insurance policy must
provide coverage for every full 24-hour
day that it is in force, every insurance policy
expires at 12:01 a.m., meaning one minute
after midnight on the specied date. Therefore,
any premium payment must be received before the
cancellation date in order for the policy to remain in force.
Frequently Asked Questions
The Department wants all New Jersey drivers to make informed decisions
regarding their auto insurance coverage. We are happy to assist with any
additional questions you may have about insurance.