Online Bill Pay Can Cause Issues With Your Insurance Policies
Don’t let online bill pay with your bank cause your insurance to be cancelled!
So how can online bill pay cause your insurance to be cancelled?
Check out this video by Nancy Nicklow and/or continue reading this blog by Jerry Nicklow.
There are two major issues with using your bank’s bill pay service to pay your insurance policies:
- Most insurance companies do not accept money electronically through the online bill pay systems. Therefore a check has to be mailed in most cases.
- Banks usually only print these checks once per week to be mailed.
Issue number 1. Most insurance companies do not accept electronic funding form online bill pay service.
Online bill pay is a great service offered by banks. But if the payee does not accept electronic funding, then it can cause a delay in your payment being applied.
In most cases, the money is deducted from your bank account on the day the check is scheduled to be paid. So your account will be out these funds even though the receiving party has not received them yet.
This can cause a false assumption that the payment has been received by the other party. As you will see in our next topic, it can take up to 2 weeks for that money to get to the payee.
Issue number 2. Banks usually only print the online bill pay checks once per week.
From what we have been told, these bill pay checks only get printed and mailed once per week. So it could take up to 7 days for your bill pay check to get printed and mailed. And when you factor in mailing time, it could take 10-14 days for your payment to reach its destination.
How can these delays cause issues with your insurance policy?
Let’s lay out an example for you:
You have an auto insurance payment that is due on October 1st. You schedule your payment on your bank’s website with the due date of October 1. So on the due date, the bank deducts your money from your account and pays your insurance, so you are OK, right?
Your insurance company does not accept electronic funding from your bank’s online bill pay service. So a check has to be printed and mailed. In our example, the bank prints their checks on Wednesdays. Since October 1st is a Thursday, your check will not get printed or mailed until October 8th. This already makes your insurance payment past due. And most likely in a pending non pay cancellation status. Most companies have a 2-5 day grace period before applying a late fee and mailing out a non pay cancellation notice. This time period would pass by the time your check is printed and mailed. Then you have to factor in the mailing time. So you can see that your payment can be up to 2 weeks late. These delays with online bill pay can actually cause your insurance policy to be cancelled for non payment.
Another issue we have seen with online bill pay:
Once the check is mailed, it it treated similar to a cashier’s check. The money is deducted from your account at the time of printing. So the recipient can be confident that the funds are good when receiving the check.
So, if one of these checks gets delayed or lost, the stop payment process can be a bit cumbersome. Check with your bank if you have questions on how these are handled.
So what is the best way to pay for your insurance?
If you want to schedule your insurance payments to be paid on the same date every month, there is a better option for you.
Almost every insurance company will offer an automatic EFT payment option. Most let you pick the day of the month for which you want to make your payment.
And to top it off, you can SAVE MONEY for most companies who offer this plan in 2 ways:
- Reduced or waived installment fees if you choose auto draft payment method
- Some companies offer up to a 5% premium discount if you choose auto EFT payment plans
You can contact your insurance professional here at huff insurance to go over your payment options. Online bill pay through your bank may not be your best option. And you could be missing out on a discount. Our team will be happy to go over the best options for you and your situation.
Huff Insurance is a full service Trusted Choice Independent Insurance Agency located in Pasadena, Maryland.