NLIC.org

Jeffrey Said:

are overdue insurance premiums subject to collection agencies?

We Answered:

The premium that they are trying to collect is not for the lapse period. It is the earned premium that was due for the coverage that was provided up to the date and time of cancellation for non-payment. If you obtained a replacement policy or returned the tags (and have the documentation to prove it) prior to the effective date of cancellation, you can take the proof to your agent or company and have them backdate the cancellation which could result in less or no money owed. If you did not obtain replacement insurance or return the tags prior to the date of cancellation, then you do owe this money and have to pay it or risk ruining your credit with a negative credit rating!

To put it another way if you had had an accident the day before the cancellation date, the insurance company would have been required to pay since you were still insured. Therefore you are required to pay for the service they provided which is insurance.

In the future if you no longer want the policy, you will need to initiate the cancellation instead of forcing the insurance company to cancel you for non-payment.

I hope this helps. Good Luck!