Is Your Insurance Company Giving You Enough Time?

An insurance company is required by law to be on time or face penalties from the state.

Insurance companies are accountable to you to observed legal time limits.

How much forgiveness does your insurance company extend when you are late on a payment? I would imagine that, for most, the answer would be either “none at all” or “not much”.

When we are late, the insurance company cancels our insurance because they didn’t get their money in time and they no longer want to provide coverage without that money. Okay, fair enough; it’s a business and they are in it to make money, not to be a charity.

But did you know that the insurance companies are also subject to deadlines? And these deadlines are not to the government, but to you. That’s right, to you!

What Deadlines Are Insurance Companies Accountable to Me For?

When an insurance company decides to make a change to your policy, your premium or to cancel your coverage they have to send you notification of these changes. The notification has to be sent out to you within a set amount of days, so that you can prepare for the change and take action on your end if necessary.

For example, say that you live in Maryland, and your insurance company is getting ready to charge you more for your collision coverage. They are required by Maryland insurance laws that they have to send you notification of this change 45 days before it takes effect.

Of course, like with most insurance rules and regulations, the number of days that have to be given for each change to your policy does vary from state to state.

What Happens if the Insurance Company Doesn’t Give Me Enough Notice?

If an insurance company doesn’t comply with the legal timeline of notifying you of changes to your policy, most of the time nothing happens to them. This is because most insurance customers are completely in the dark about these timelines, and they don’t report the insurance companies to the Department of Insurance or the Insurance Commissioner (depending on the state). If the state doesn’t know about the infraction, they can’t investigate.

In the end, it usually takes an audit of the company by the state to catch them.

What Happens if the Insurance Company Does Get Caught?

If the state ends up catching the insurance company for not giving their clients enough notice of changes to their policies, the punishment is usually fines.

Recently, the state of Maryland fined Erie Insurance $50,000 for not giving their clients the required 45-days’ notice that their insurance premium was increasing.

On top of the fine they were handed, the Maryland Insurance Administration also ordered that they pay their clients back the extra premium they had been charged with insufficient notice, as well as 10% interest. (onlineautoinsurancenews.com)

With any of these fines, the amount and how it is handled varies from state to state. It also depends on the situation, as well as how habitual the insurance company is in violating insurance laws.