September 27, 2022
Insurance Auto Pay Vs E Bill
The Most Important Mistake a Consumer can Make with their Own Insurance is to Miss a Payment and risk non coverage for a claim.
Home and Auto Insurance Electronic Billing and Auto Pay, although similar – are not the exact same thing.
- The Benefits of Electronic Billing, also called Paperless
- The Benefits of Auto Billing
- The Negatives of both
- The Admitted and Refundable UnEarned Premium
The Main Benefit of Auto Pay and Electronic Billing:
The main benefit from auto pay and electronic billing with insurance policies is to provide a higher level of certainty that the insurance bill is paid on time and hence lowers the risk of a cancelled policy. Cancelled policies can result in denied claims. Additionally with some situations once a policy is fully cancelled it can never be reinstated.
What is Electronic Billing?
Electronic billings simply electronically mails your auto and or home insurance bill. With some carriers it is nothing more than a notice via email that a bill exists on their secure site. Sometimes this may require you to login to their site to download the bill. Some insurers require passcodes. Insurance Electronic Billing often also goes by the name E Billing or Paperless.
What is Auto Pay?
Auto pay is the automatic payment of your bill. This is probably most commonly either monthly or annually. The insurer stores either your credit card information or banking information and pays the amount due on an agreed upon date. Auto Pay can go by other names such as Automatic Payment.
Electronic Billing and Auto Pay although similar are not the same thing. Also many carriers use different names and treat these general platforms slightly differently so there really is not uniformity in this regard.
Auto Pay vs Electronic Billing:
Electronic Billing is NOT the same as Auto Pay. Likewise Auto Pay is not the Same as Electronic Billing. To confuse you further, many insurers have their own names for these services.
Just because you sign up for electronic billing does not necesarily mean your bill will be paid automatically. Insureds will have to inquire with their agent or insurer to learn more.
The Benefits of Electronic Billing for Personal lines Insurance:
There are numerous benefits to E Billing. This is a partial list:
- Speed and timeliness of the Bill
- De-clutters your mail box
- Often allows for simple easy storage of bills
- A probable higher percentage chance of consumers viewing and seeing bill.
- Cuts down on wasteful paper
There are a lot more benefits but these are some of the major ones. Some of the potential benefits are dependent on the consumers tech sense though. With older clients sometimes preferring a physical paper bill.
“The Most Important Mistake a Consumer can Make with
their Own Insurance is to
Miss a Payment and risk non coverage for a claim.”
The Negatives of E Billing for Personal Insurance:
Not everything is perfect with E Billing.
- Can get Lost in your Email Inbox
- Potential security issues
- Lost passwords
- Assumed entry into Auto Pay
- Dependency on the internet working
The Benefits of Auto Pay for Home Auto and Umbrella Insurance:
For many consumers auto pay is quite frankly a must. For others it might be a nice to have.
- Automatic payment of this most important series of bills.
- Relaxation knowing that this one bill type is handled
- Much lower chance of lapse in coverage
*In this agencies humble opinion, clients that pay monthly should be put on auto pay. The case is NOT as strong with clients that pay annually.
The Negatives of Auto Pay:
Coming up with negatives in my opinion for home insurance or auto insurance auto pay are not easy. But there are some.
- Possible charge to the Wrong Card/ Bank Account Number.
- Lost passwords and or Old Credit Card Numbers.
It is also possible that less tech savvy consumers might just not feel comfortable with auto pay and prefer mailing in their payment.
Marindependent’s View on Electronic Billing and Auto Pay:
Although not perfect, we believe that electronic billing and auto pay are beneficial about 3 to 1. Although its hard to come up with exact specific numbers there are only a few instances that we can recall where autopay turned out to be a major issue. A minor issue more often, but a major problem – not so much. This agency can remember, however, numerous times whereby autopay came to the rescue.
I frankly have never heard a client complain to me about their bill being paid automatically. I think its generally very good thing.
Check Out this Article that Marindependent is cited in: Best Homeowners Insurance Companies 2023
The Non Admitted Insurance Exception:
Having just sung the praises of ebilling and auto pay its time to review when it might not be available or might not be in your best interest.
If you have a very special insurance situation or if you have Non Admitted Insurance, such as Lloyds of London, it might not be practical. Non Admitted (also called Surplus Lines) insurance, is a type of insurance for very hard to place risks. Typically non admitteds require full annual payment at policy inception and they usually will only refund a portion of your policy premium. This is called a Minimum Earned Premium and it is an clause somewhat exclusive to non admitted insurance.
Therefore if you have an odd auto or home or umbrella insurance situation you might not opt to choose Auto Pay and E Bill.
“The Most Important Mistake a Consumer can Make with their Own Insurance
is to Miss a Payment and risk non coverage for a claim.”
Marindependent Insurance Services LLC
Should you Get E-billing and Auto Pay Set Up for your Home and Auto Insurance?
Yes, most consumers should sign up for Electronic Billing and Auto Pay as soon as possible. The benefits generally outweigh the negatives. Home and Auto Insurance, although often not cheap, can be far cheaper than the alternatives. These alternatives include Forced Placed Home Insurance, Denied Claims, Fines from the DMV, Repossession of Automobile, Paying attorneys to Defend you in Court.
What happens if you pay for Home or Auto Insurance via Auto Pay but you Want to Cancel before the Insurance Term is Up?
About Insurance refunds and Unearned Premiums.
This is a great question. And its not possible to provide a ubiquitous answer. It can be somewhat different in some states/ jurisdictions and or with some insurers. However in general for admitted insurance if you notifiy your insurer in writing [with a signature] of the request for cancellation they should return any “unearned premium.”
Unearned premium can be defined as: “the premium that corresponds to the time period remaining on an insurance policy” or the “unused insurance time.” It is the part that has been paid timewise, but not used. [Lets consider “used” meaning covered time.] If you paid for an annual insurance policy for a year and wish to cancel three months in than the first three months are the earned premium and the remaining nine monhts would be the unearned premium. At least in this example.
This is NOT the case with many nonadmitted insurers. Many nonadmitted policies contain clause[s] that limit how much money could/would be refunded. Often fees attached to these policies are unrefunable as well.
A problem exists, sometimes, with the time period of the notification to cancel the policy though. If you wish to cancel a policy, send your insurer a message as soon as you can. Most insurers have a limit to when they will accept a cancellation date, post dated.
A Qualifier on Auto Pay:
Does it make sense to set up Auto Pay for All of your Bills? Possibly, Probably not. Auto pay is best used for those bills that just have to be paid for services that you must have. Your home insurance bill. Your alarm bill, etc.
Do All Home, Auto, and Personal Umbrella Insurers Offer E Billing and Auto Pay:
No, not all insurers offer auto pay and e billing at the time of publication of this post. However, more and more insurners are seeing the value and making it available. Most insurers now have some version e billing and electronic auto pay. In general, from the insurers standpoint – it is generally a good thing for retention.
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