Why is it important to pay bills on time?

Paying your bills on time is a matter of individual responsibility, the same as living within one's
means.  It affects your ability to obtain credit, the interest rates you pay and it can even help you
reduce your insurance rates.  

What are the consequences if I don't pay my insurance bill on time?

The first consequence is generally a late fee.  This is charged by the company in part to cover the
additional costs of sending cancellation and reinstatement notices out.  It is also a deterrent to paying
late.  

The next, and more serious consequence is that you may not be covered for a loss.  If your policy is
cancelled for non-payment, you do not have coverage in force.  Insurance companies will not back
date or reinstate policies to cover a claim that occurred after your policy cancelled.  Perhaps it is
obvious why, but if not, it is suffice to say that insurance companies would not generate enough
premium to pay the claims of people who bought insurance only after they had a claim.  Although it
may have just been a short time since your coverage lapsed, the same principle still applies to
policies that have cancelled for non-payment.

How else does paying my insurance bill on time matter?

It can lower your insurance costs in two ways.  First, it is important to maintain continuous coverage
(with out a lapse) in many cases to qualify for a payment plan, the best rate or even to qualify for
coverage.  

Next, many insurance policies provide discounts for having a good payment history.  These discounts
can be significant and are based on real actuarial data - meaning claims.  People or businesses that
are responsible managers of their money also tend to be more responsible in other areas, including
protecting their property, conducting business safely, implementing procedures or protections that will
reduce claims, etc.  As a result, these same people and businesses have or make fewer claims on
their insurance.  Much of this cause and effect can be seen very clearly in the statistics and actuarial
work conducted by insurance companies.  In fact, some claim that it is one of the best predictors of
how likely it is a business or person will file a claim in the future.

There is even one more advantage to paying your insurance bill on time.  Many insurance companies
now offer paid in full discounts for paying your premium in full and on time.  Statistically, customers
who pay in full and on time tend to have fewer claims.  If you pay late, you are generally not eligible
for this extra savings.


These explanations are intended to provide a simple understanding of some of the basic provisions
found in most insurance policies.  Sometimes simple explanations do not address all of the particular
circumstances of a claim, nor may they take into consideration case law or other provisions within a
policy.  This FAQ section of the website does not replace, alter or amend any language in your policy, its
terms, conditions or exclusions.  
_Frequent Questions

Automobile
What is the Michigan
Catastrophic Claims
Association (MCCA)?

Bills
Why is it important to pay
my bill on time?

Claims
What if I don't replace my
property, does the
insurance company still pay
replacement cost?

Should I have my car
windshield repaired or
replaced?

What do I have to do to
have my claim paid?  What
are my responsibilities
during a claim?

General
Why do insurance
companies use insurance
score discounts?  Is it fair?

Property
Why is my replacement cost
more than my home or
building is worth?