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 Posted: Sat Apr 04, 2009 9:44 pm Post subject: Can a policy cancellation request be refused? |
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I recently faxed in a policy cancellation request for my auto insurance. Shortly after, I received a voicemail from my insurance agent stating that they did receive my cancellation request but wanted me to call them back before they cancel it to see if there is anything they can do to keep my business.
The request was faxed in a few days prior to the requested cancellation date. It is now a couple days after the requested cancellation date and from what I can tell, the policy is still active.
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| Posted: Sun Apr 05, 2009 12:51 pm Post subject: |
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it can be if the cancellatrion request is filed after the freelook period of the insurance policy.Free look period is mentioned in the policy docs. I think if you do not have the policy docs just visit the insurer's website and confirm the free look period. Free look period for auto insurance i am not sure about it. 
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amit
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| Posted: Sun Apr 05, 2009 1:11 pm Post subject: |
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| I do not quite understand what the free look period is. Does this give the insurance company your are cancelling a chance to look over your policy and seee what they can do to keep your business? |
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| Posted: Sun Apr 05, 2009 1:59 pm Post subject: |
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| Quote: | In life insurance and annuities contracts, there is also a provision for a Free Look Period that allows the policyholder the right to cancel the contract within the first 10 days after purchase.
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i doubt whether any consumer does have the some right in auto insurance or not but in life insurance customer does have the right to cancel the deal within first 10 days of the policy issuance.
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amit
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| Posted: Sun Apr 05, 2009 3:02 pm Post subject: |
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I have had the policy for around 3 years now. My last renewal was 4 months ago and it says you can cancel anytime 60 days after renewing by faxing in a cancellation request.
I'm just wondering if the voicemail asking me to call them to give them a chance to keep my business is a legit reason to delay cancelling my policy and continue to charge me. They weren't interested in negotiating before and I already have new insurance.
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| Posted: Mon Apr 06, 2009 3:45 am Post subject: |
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Automobile policies don't have free-look periods. Those are pretty much related to life, health and annuity products only. Also, don't get too attached to a "10-day" period. Free-looks have different time periods depending on the type of policy.
Chances are that there's simply a lag in the paperwork. If you don't receive cancellation papers from the insurer in a week or so, then give your agent another call. I can appreciate your agent wanting to retain your business, but I can also appreciate timely processing of paperwork!
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| Posted: Mon Apr 06, 2009 4:59 am Post subject: |
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But Ins Teacher the OP said he/she already has purchased another auto policy from another carrier. Is that going to be a problem if the previous policy has not been canceled yet?
Op have you tried calling the insurance agent once more to see if they have made any progress with the paper works?
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| Posted: Tue Apr 07, 2009 5:55 am Post subject: |
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| Quote: | | My last renewal was 4 months ago and it says you can cancel anytime 60 days after renewing by faxing in a cancellation request. |
This means that you have the right to cancel within 60 days of your renewal date. You said that you complied with this requirement, if I remember right. Insurance companies have the right to charge premium for any coverage provided, but that shoudn't be the case here past the point of your requested cancelation. Assuming the coverage was properly canceled, there shouldn't be premium charges after that point, period.
If the agent screwed up by not canceling the policy properly, he better get on the phone with his underwriter and beg forgiveness and ask that the policy be canceled retroactively to the customer's cancel request date. If the underwriter won't do it, frankly- the agent should be on the hook for the charges and needs to get his (fill in the blank) together.
I have rarely seen this be a problem. Normally, if there is a problem with the cancelation on the company's side, a phone call from the producer usually fixes things up easily. I would also suggest your agent put in a call to billing ( most agents know people in billing) to make sure they know what's up, because they're the ones who pull the money strings in the computer.
Keep us informed.
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| Posted: Tue Apr 07, 2009 7:45 am Post subject: |
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Hi,
| Quote: | | I do not quite understand what the free look period is. |
IMO the free-look period is a period of time during which you may experience the benefits of a commercial product or service for which you're not charged. Some companies would offer you a period of time within which you may call for a refund if you change your mind.
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| Posted: Tue Apr 07, 2009 8:58 pm Post subject: |
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Guest,
Just follow up with your agent and make sure he cancels it correctly, effective the date you requested on your original written request. The agent can not refuse your cancellation.
It sounds like the agent delayed processing the request because he wants to try to talk you out of your decision. I don't blame him! However, unless YOU change your mind, then you have already sent in the written request, and he will be required to honor it. You have no obligation to pay for coverage after the effective date of your written cancellation request.
To get to the technical jargon, an insurance policy is what is called a "unilateral contract" ("one-sided" contract), which means that the only party required to perform is the insurance company. There are very few reasons for which the company can cancel your coverage. However, YOU have the right to cancel at any time. (That is what makes it one-sided.)
There is no "free look" period that applies here. The only "free look" period on an auto insurance policy is on the company's side; when the agent binds a new policy, the underwriter has an opportunity to review the policy (usually 60 days) and cancel it for any reason during that period. After the free look period is over, then the company can only cancel for a very short list of reasons. YOU can cancel at any time and for any reason, however.
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| Posted: Wed Apr 08, 2009 4:45 am Post subject: |
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Christy P said:
| Quote: | | To get to the technical jargon, an insurance policy is what is called a "unilateral contract..." |
and
| Quote: | | the only party required to perform is the insurance company. |
and
| Quote: | | The only "free look" period on an auto insurance policy is on the company's side; when the agent binds a new policy, the underwriter has an opportunity to review the policy (usually 60 days) and cancel it for any reason during that period. |
I gotta say, I'm impressed. This is the "back-end" side of the business, and not many people are aware of this kind of stuff. You're either a recent licensee (I say that because this is commonly part of license training) or you know your biz. I think it's the latter.
Contract law is actually pretty simple when you get down to it. There are a few basics that govern all contracts, one of which is the unilateral basis of insurance contracts. Since the insurer was the party that drew up the contract and the applicant/insured had zero input as to what was contained or the language within the contract, the only promise made in an insurance policy is by the insurer. Therefore, only the insurer can be sued for failure to perform. The insured cannot be sued for performance breach as he never made any legal promises, so there can't be a breach!
Most policyholders don't understand this concept, and there's a lot of law behind it. Right with this is the "law of strict construction" which basically says that any ambiguities in these contracts ("adhesive"contracts) are ruled against the insurer in court. What's an adhesive contract?
A contract of adhesion is a contract that is not subject to bargaining or negotiation and is offered to the buyer on a "take it or leave it" basis. The language cannot be altered by the agent or the applicant, and must be accepted by the applicant as issued. If the applicant doesn't want it? They "leave it" and find another policy somewhere else. I love this one.
I've had numerous applicants want to negotiate the rate or the coverage. It's especially fun in commercial P&C and life insurance. Quote some high-end life insurance policy for say, $7500 a month. Send in the app, the underwriter gets the medical info, issues but rates up the policy to $9,000 a month. Now you have to tell your client what's up. Usually it's indignation, then disbelief, then the negotiating sets in. "That's $1,500 a month higher than what you quoted me. That's $18,000 a year times 10 years! (10-pay life plan) That's...that's...that's...$180,000 more IF I DON'T DIE."  Tell you what, I'll split the difference with you. Give ya $8250 a month, right down the middle. But you gotta give me something..."
This has happened to me, and more than once. You patiently explain to the customer that the only real option you have to keep him at the quoted premium amount is to lower the amount of coverage (bad idea) or change the premium payment mode. Patience...
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| Posted: Wed Apr 08, 2009 7:26 am Post subject: |
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Hi Insteacher,
It's an awesome explanation..but I'd like you to explain a few things over here-
| Quote: | | The language cannot be altered by the agent or the applicant, and must be accepted by the applicant as issued. |
Can you illustrate as to what type of verbiage is used in any contract which denotes that further negotiations are possible. It's really interesting.
| Quote: | | You patiently explain to the customer that the only real option you have to keep him at the quoted premium amount is to lower the amount of coverage (bad idea) or change the premium payment mode. |
What benefits would it serve the carrier if the payment mode is changed?
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roddick
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| Posted: Fri Apr 10, 2009 3:10 am Post subject: |
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Roddick, great questions. Let me see what I can do.
| Quote: | | Can you illustrate as to what type of verbiage is used in any contract which denotes that further negotiations are possible. |
There is no contract language that allows negotiation other than language governing losses and associated disputes. Those are now commonly settled through arbitration instead of lawsuits per policy language. The idea of the unilateral contract and principle of "adhesion" go together salt on a cracker- they're basically "stuck" with eachother. If you'd like further clarification on those concepts, let me know and I'll pm ya.
As far as:
| Quote: | | What benefits would it serve the carrier if the payment mode is changed? |
OK, you're more than likely aware that most insurers will offer different payment options to a policyholder. Let's say we talk about life insurance for this example.
Say a carrier offers a number of different payment modes: monthly, quarterly, semi-annual, annual, and automatic account debit options.
Every time an insurer has to process a premium notice, it will cost them money. You know that the costs of operating ANY company are typically passed onto the consumer, and insurers are no different. The expenses of the insurer are normally passed on to the consumer in the form of "loads" attached to the contract. Front- and back-end loads accompany just about every insurance policy in existence.
Let's say that your client choosing a monthly billing option. That means the carrier will have 12 different costs that year associated with billing the customer. That means 12 "service charges" billed to the customer. Everyone has seen service charges. That's a fancy way of saying "you cost us money by making us bill you, and now YOU get to pay for those costs." Let's say the service charge is $5 per billing, which isn't uncommon. Now multiply that by 12 months, and you're paying $60/year in service charges. 
Many policies also have additional administrative fees that are based on "service" levels and these are added to your bills, usually on a quarterly basis, even if you pay monthly. These fees, normally associated with high-end P&C and pension/group/life stuff, can run into the $100s per year, and will incur an additional service charge per billing just to inform you that you owe them more money. 
Now, consider the client who decides to pay annually instead of monthly. He only gets one bill a year, therefore incurring only one service charge of $5. Already we have a savings of $55/yr. Add in the admin. service fees and that's another $15/yr and we're at $70. Multiply that by 40-50 years for some life policies, and we're talking thousands of dollars of difference in premium just because of service charges!
Now, in a lot of cases, this is a gross over-exaggeration, but in others, it's an under-estimation. I have seen carriers literally charge $15.00/mo. for service fees on universal life insurance policies! Don't even get me started on the securities side of things...!!! 
Way more to it than we're babbling about here, and anyone can pm me for more if you're that insurance geeky. Sad part is...I am.
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| Posted: Fri Apr 10, 2009 4:37 am Post subject: |
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Hey INS this is really a nice illustration given by you about the payment mode but what i personally believe and also suggest to those who are employed to go for monthly mode/quarterly mode.
i will explain why is it so!!
suppose one client is paying $ 300 monthly premium rate and $ 10 load every month thus his load comes to $ 120 per year.
Now his annual premium comes to $ 3600.With the most of the Americans either they pay it through credit card because nobody (most of the ) guys do not plan for a yearly payment of insurance premium. and thus end up taking the Credit card loan or money from friends or personal loan which again ends up in more cost in terms of interest which is surely higher than the administrative cost of $ 10 per month.Interest for $3600 amount with 0.5 % minimum interest rate monthly will turn to $18 per month.(Nobody offers a personal loan with 0.5 % monthly rate, i have just used this to show that even if somebody offers such a low rate still it is not economical to go for a yearly mode.
But again i need to remind that those who get annual bonuses from their employer can go for annual mode.
But for those who are not having any kind of bonuses at the end of the year should lessen their burden by paying the insurance premium with direct debit from their salary option which i suppose is the best option.
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| Posted: Fri Apr 10, 2009 5:28 am Post subject: |
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Sorry Amit, I have to poke some holes in your theory.
First of all, the annual premium charged by carriers is not derived by multiplying the monthly premium x 12. Carriers offer a substantial discount to those paying annually as opposed to monthly. If the monthly premium is your $300 example, if you were to pay annually, you'd likely pay around $3200-$3300 as a one-time annual payment.
Next, your math on the interest rate charged to the card is all wrong. You said:
| Quote: | | Interest for $3600 amount with 0.5 % minimum interest rate monthly will turn to $18 per month.(Nobody offers a personal loan with 0.5 % monthly rate, i have just used this to show that even if somebody offers such a low rate still it is not economical to go for a yearly mode. |
You're stating a 6.0% APR on the debt (0.5% monthly rate). You also said that "nobody offers a personal loan with 0.5% monthly rate." I have a personal line of credit at 5.99, completely unsecured. That's technically .49916%/month!
Your math of $18 a month in interest is also based on simple-interest calculations. Credit card interest is compounded. There will be interest on interest. Also, don't forget that you're making (hopefully) payments on the debt, which will reduce the interest charged as the balance lessens. Throw in the $300 annual payment savingsas mentioned above, and if you pay off the card in the first year, you'd still be ahead of the game, monetarily speaking. I'm not going to do the math, but trust me- it would work.
Lastly, I rarely had people use credit cards except for monthly debits, and I would always suggest to the client to try to pay cash with a debit card withdrawal instead. I hated seeing clients pay interest on insurance premiums. The only exception to that was premium financing companies, and they were pretty much used only for commercial P&C risks. We had the vast majority of our customers who would write checks for the annual premium without blinking an eye. We used to insure high-end buy-sell and business continuation contracts with monthly premiums that would exceed $20,000, and they would save $50,000 by paying annually. They'd write us a check for $200k and not even breathe hard. Nice. 
Would you look at the way this thread has wandered?? 
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