By Kevin Komar
Sinas Dramis
By now you are probably feeling a little unsecure about short-term finances and about paying for automobile insurance for a car you may not be using.
The State of Michigan’s Director of the Department of Insurance and Financial Services (“DIFS”) issued a Bulletin on April 13 asking insurance carriers to be “flexible” regarding payment of auto insurance premiums.
The director asked that carriers allow for a 60-day “grace period” to pay for past due insurance premiums before cancelling coverage. The director also asked insurance carriers to consider waiving fees for late payments, allow people to suspend certain types of coverage without losing coverage, or consider different payment plans.
1. Do not automatically assume your insurance company will be “flexible” as this recommendation by the State of Michigan is not an order the insurance company must follow. Find out if your insurance company is willing to be “flexible” regarding payment of premiums before you do not pay.
If you do not pay the premium, your carrier might cancel your policy. My carrier is refunding a portion of my premium and is willing to work with its insureds on payment options but not all carriers do this.
Insurance carriers often use lack of payment for a premium to automatically cancel coverage and you cannot drive your uninsured car lawfully in the state of Michigan.
2. Get any “flexible” treatment regarding your premium payments in writing or email confirmation before you do not pay. If you were involved in an auto accident during the pandemic and did not pay your premium, the insurance carrier could claim failure to pay entitled the carrier to cancel your policy.
3. Many people are dropping auto insurance coverage temporarily, or changing coverage because they are not driving as much. Contact your carrier as soon as things go back to normal. I can see situations six months from now when people forget to add a vehicle back to their policy or to tell their carrier they are commuting to work. An insurance carrier will not pay benefits if you are driving the car without coverage. A company might also refuse to pay benefits because it will claim you committed insurance fraud when you started commuting without telling them. Do not assume they will know when you go back to work and will adjust your premium and coverage automatically.
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Kevin Komar is an attorney with Sinas Dramis in Lansing.
