Insurance - paying monthly - what you need to know

[yambabe]

I see this topic crop up all the time in different threads and felt that it needed clarifying as some people don't appear to understand how it works.

There are two ways that you can pay monthly for your insurance.

The first is actually quite rare, it's a month-by-month policy, I know ebike offer them as do a couple of other companies now but they are not usual. In this case you pay for each month's insurance at the beginning of the month, and you can usually cancel with nothing more than possibly an agreed cancellation fee before the start of the next month. Your insurer will send you a new certificate of insurance every month once they have received your payment. You can get continuous cover in this way but it tends to work out quite expensive for a full year and if you miss your regular payment date for any reason you will no longer be insured. Really useful if you just nmeed to insure something for a short time though.

More common is the monthly payments option on an annual policy. I need to stress here that in this case you are buying insurance for a full year upfront but the broker or underwriter is entering into a credit agreement with you to pay that amount off. You are NOT buying monthly insurance as per the month-to-month contract above. You will get an insurance certificate that covers you for a full year at the start of the policy. Where you get into difficulties with this type of payment plan is if you miss a payment or need to cancel. If you miss a payment your insurance is not necessarily cancelled immediately, usually the insurance co will try to contact you to get a replacement payment, only if you are unable to do this will they cancel your policy and they will do this, in writing, and ask you to return the certificate to them.

If you need to cancel one of these policies, make sure you have read the small print before you agree to it in the first place. Usually you will be charged a cancellation fee and may only get a portion of the original premium back calculated on a percentage basis. This may or may not be enough to pay off the remainder of your monthly payments! So you could find yourself in the position that you still have to make your usual monthly payments even though you are no longer insured, and if you stop paying they have every right to pursue you legally for the balance.

Hope this helps some of you to understand what you are committing to when you take out insurance!

TL;DR - read the bloody smallprint before you agree to anything to do with your insurance, if you don't understand it ask someone who does!
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Sod falling in love, I wanna fall in chocolate.

[iooi]

Great post needs to be made a sticky. Or added to new users section.

Something also worth adding is if anyone thinks that a way out of paying is to simply cancel the DD.
Be aware this will result in the policy being canceled/void and as such you WILL HAVE TO DECLARE this on future policies....

With of course the increased premium it will attract.
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Just because my bike was A DIVVY, does not mean i am......

[Rogerborg]

Yup, that looks right, except I'd say that in practice you'll never get back enough to pay off the remainder of the credit agreement, so you'll always be left owing something if you try and cancel mid-policy.

tl;dr - if you can't afford to pay for an annual policy, you probably can't afford to cancel a "monthly" one either.
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Biking is 1/20th as dangerous as horse riding.
GONE: HN125-8, LF-250B, GPz 305, GPZ 500S, Burgman 400 // RIDING: F650GS (800 twin), Royal Enfield Bullet Electra 500 AVL, Ninja 250R because racebike

[c-m]

It's pretty obvious.

That unlike eBike, the pay monthly schemes are credit agreements. A third party pays your insurance for the year, and you pay the third party back in instalments usually at a silly interest rate like 34% APR.

If you cancel your policy, you are still liable for the credit agreement. If you stop paying the instalments, this doesn't always mean your policy is cancelled, as the insurer has already been paid.


With all due respect, i fear for people who are unable to comprehend the basics.

Still it's good information that could go in the newbies section for all the 16-17 year olds.
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Motorcycle headlight bulbs and HIDs
Blogging about my bike and trips
https://ridershandbook.com/

[Rogerborg]

To be fair, insurers don't exactly shout about it in the headline print. But that said, if you don't do 30 seconds of reading to see what you're actually agreeing to, you're not likely to check on a forum first to see what the catch is with pay-monthly policies either.
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Biking is 1/20th as dangerous as horse riding.
GONE: HN125-8, LF-250B, GPz 305, GPZ 500S, Burgman 400 // RIDING: F650GS (800 twin), Royal Enfield Bullet Electra 500 AVL, Ninja 250R because racebike

[waffles]

Can I add to the point about the montly insurance? They often accellerate your NCB, ebike give you one year after paying for eight months.
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Theory test - 19/8/09, CBT - 11/10/09, MOD 1 - 16/8/10, MOD 2 - 27/10/10
Past rides Yamaha XT125X, Triumph TT600, Honda XR250
Current rides Suzuki GSXR 600, Honda MSX125

[Vincent]

Don't be tempted to use your defunkt policy for a "producer" if you've defaulted on the payments either.
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Space Is Deep