What is a “grace period”? - 23 Feb 2010 17:42
Many a car insurance policy stipulates or grants the insurance policyholder a grace period for making good on their premiums. Normally insurance premiums are debited the first day of each new month – this date is stipulated on the contract or the insurance schedule. A grace period is a duration of time after this premium should have been paid.
If a client defaults on a payment, the insurer grants him or her a grace period where the vehicle is still covered by the insurer as long as the policyholder makes good on the missed payment. Usually this grace period is 15 days. If after 15 days the premium is not paid then the insurer considers the policy cancelled and no longer covers your vehicle.
After this grace period has expired, the policyholder will have to pay a reinstatement fee to re-enter the contract of insurance. If the premium was not paid, and the grace period missed, then there will be no cover for the vehicle for that month.
Not only does this put you and your vehicle at a high risk, but most insurers consider a defaulted payment justifiable grounds for canceling your no-claim bonus as well. You will have to start rebuilding you 3-year good payment term (or however far apart the paid bonuses are). Make sure to read your insurer’s policy documents to determine what their regulations are for defaulted payments, reinstatement fees and the length of grace periods.
Many a car insurance policy stipulates or grants the insurance policyholder a grace period for making good on their premiums. Normally insurance premiums are debited the first day of each new month – this date is stipulated on the contract or the insurance schedule. A grace period is a duration of time after this premium should have been paid.
If a client defaults on a payment, the insurer grants him or her a grace period where the vehicle is still covered by the insurer as long as the policyholder makes good on the missed payment. Usually this grace period is 15 days. If after 15 days the premium is not paid then the insurer considers the policy cancelled and no longer covers your vehicle.
After this grace period has expired, the policyholder will have to pay a reinstatement fee to re-enter the contract of insurance. If the premium was not paid, and the grace period missed, then there will be no cover for the vehicle for that month.
Not only does this put you and your vehicle at a high risk, but most insurers consider a defaulted payment justifiable grounds for canceling your no-claim bonus as well. You will have to start rebuilding you 3-year good payment term (or however far apart the paid bonuses are). Make sure to read your insurer’s policy documents to determine what their regulations are for defaulted payments, reinstatement fees and the length of grace periods.