He’s denied insurance after two late payments

Here’s a cautionary tale that shows why you should always make your insurance payments on time. The consequences of being late can be horrendous.

Use post-dated cheques, a credit card or preauthorized payments from your bank account. Being late, even if only a few days, can cost you plenty when you renew the policy.

And if you switch insurers, you may be cut off by the new company once the information is disclosed.

William wrote to me to describe how he was blackballed when trying to switch his car insurance. If he didn’t get coverage, he could lose his leased car and his job.

He was surprised to find that he was classified as high risk after being late with two payments in two years, never by more than a week.

Yes, I know that he can get car insurance from the Facility Association, the insurer of last resort, but the rates can be sky high.

Here’s his detailed letter below. Insurance buyer, beware.

Author: Ellen Roseman

Consumer advocate and personal finance author and instructor.

17 thoughts on “He’s denied insurance after two late payments”

  1. I’m at risk of losing the house that I & my children call home because of similar treatment.

    My home coverage wasn’t continued because I had 2 claims within 3 years. The time between the first claim and the more recent one was about 32 months.

    They got rid of me 4 months before the 36-month mark, based on their guidelines, via canned letter sent registered mail. So my signature I had to provide on the outside of an envelope, which could have contained a brochure for all I knew, covered them legally.

    If I by chance get coverage it will be expensive. If i get none, then I have no mortgage, no house. Help.

  2. Insurance companies are ‘not your friends.’ I’ve learned to be very cautious and sceptical.

    If you don’t ask precise questions, you won’t receive complete information. But if you’re not in the business, how the heck do you know the pertinent details about which to ask?

    I switched home insurance companies two years ago and was told to let the office know if I decided not to renew. I did, but ‘read’ it as a courtesy call to them. Never was there a mention of the severity of failure to do so.

    Glad that I read this. William, so sorry to hear of your situation. I hope that there`s resolution, soon.

  3. Correction: I meant to say that if you don’t ask precise questions, you ‘may not’ receive complete information. Customer beware.

    Personally, I’ve found that it pays to research first so that one is at least somewhat prepared when one speaks to an agent.

  4. Hi Ellen,

    Question: How can one determine if there’s a record of non payment on your file other than asking your insurer directly?

    Thank you

  5. There are alot of insurance companies who will still accept people who are late on their payments. What hurts you is cancellation for non-payment. If you have two of those in three years you must pay your policy in full.

  6. Territorial ratings are the equivalent of “geographic profiling” and are used to goudge accident-free drivers.

    But after you pay more than you should because you live in the “wrong” spot, you discover “The Price was Wrong”. How do you know? The Ontario auto insurers’ ongoing “educate the public” campaign says so.

    If you ever get hurt badly, you will then discover that your over-priced policy is worthless and the insurer won’t honour its obligations.

    The insurers will line you up at FSCO (to wait for over a year) behind 40,000 other injured Ontarians waiting to contest (usually wrongly) denied treatment benefits, etc.

    Worse, if you happen to be of the “wrong” ethnic background, you might find your auto insurer playing the “fraud card” based simply on race/ethnicity.

    In other words, if you are of the “wrong” race/ethnicity, the insurer might automatically “red flag” your claim for suspected fraud.

    We need a public inquiry into these systemic abuses. The insurers trot out fuzzy fraud loss estimates to justify calling most injured claimants fraudsters and to deny policy benefits.

    But are these estimates based on self-serving accusations of auto insurance fraud – or actual convictions? Nobody asks!

  7. The problem with the industry is that it has lost sight of people and set its sights solely on profits.

    For people who were late on their payments and got cancelled, that is unfortunate. We all have an obligation to pay our bills when we can.

    Sometimes, unfortunate circumstances happen. With all circumstances, however, it is probably best to contact the insurance company when you first know there is an issue.

    If you work through a broker, then make them aware and hold them accountable. They are making a commission off every policy they sell. Don’t let them off the hook if they tell you one thing and something else happens.

    Make a complaint to the provincial regulatory bodies (RIBO in Ontario). Call your MPP or whatever the person is called in your province.

    The pressure of the mid-2000s must be brought to bear again on the auto insurance industry, so that it can be reformed further. Home insurance should also be included.

  8. I am having similar issues with RBC due to 2 missed payments they want a year upfront, I can’t get insurance anywhere I was quoted as high as $7000 a year that’s more then a DUI for crying out loud.

  9. As well as TD Bank because my ex is forcing a sale we’ve been here 6 years this is my children’s family home, we’re being forced out even after we’ve kept mortgage payments up.

  10. I purchased my my home three years ago. I had one insurance claim and RBC dropped me as a customer.

    Now i am finding it difficult to find a reputable company to insure me. I feel like I have committed a crime here.

    What is the purpose of having insurance? Should you start looking for a new coverage the moment you have a claim for fear they might drop you as a customer? Is this even legal? Is there a consumer protection law for a case like this?

  11. Late payments, as long as you pay, should NOT affect rates, but it will. That’s clearly a big problem with insurance companies. They have been given too much power.

    NO ONE assumes that, and if they put it in big letters on their policy, NO ONE would use it.

    Would you sign this: By accepting insurance from us, you agree that if you miss a payment or are late, we can cost you 5-10 per cent more over the next 6 yrs as a punishment, at our discretion. Money they will take from your children.

    Seriously, that is really what it is. Obviously, no reasonable person would sign that, but that is effectively what you’re signing.

    The insurance industry is corrupt!

  12. Folks – be careful when dealing with Allstate for car insurance in Canada. You can’t trust the information provided by their call centre.

    In my case, when they discovered the errors made by their customer service rep, all they did was say you are right, we are sorry. But they did nothing to help me.

    Acting on the incorrect advice I received is going to cost me $4,500 in increased premiums. I have no recourse but to warn the public. I hope this does not happen to you.

  13. I had two late payments, due to:

    — Credit card lost at the end of the month so I asked for replacement, which was delayed by a technical issue. So I missed one pre-authorized deduction.

    — I was away from Toronto for a long vacation and somehow the pre-authorized deduction didn’t work. My representative who received the letter for me didn’t notice there was a DEADLINE for paying the insurance.

    When I got the 2nd late payment, RBC dropped me.

    Now I can’t get any insurance. I can’t buy a car, my home is not protected. I can’t even go to work, so I can only lose my job.

    I work for a big company and a small business at the same time. I’ve paid lots of tax to the government and I am contributing to the economy. But now I feel I am being treated unfairly.

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