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Good Tuesday to you, dear ADI Forum Reader,

     I hope you are all well and doing great.  Quick personal update … I am still dealing with pneumonia, however, I am doing better than most (Superhero and all) and I am hopeful that by this weekend I will be in prime-super-form once again.

     OK, on to the hot topic at hand for today’s TMIT – Cancellation due to non-pay.  As we all know, it has been a topsy-turvy world in 2020 and things have been difficult for many.  Not to rehash the past, or pontificate ad nauseam on the future, but shut-downs, stay-at-homes, business closures, limited hours and seating, on and on, have been a difficult financial situation for many.  With that, finances get tight and certain things either need to be let go out of necessity, or they were let go and missed simply because folks were on overload and just did not think about certain things during crisis/panic mode.  I totally get it.  A few short months ago we were worried about even finding toilet paper for God’s sake, let alone if certain bills were getting paid.  (Quick aside, you know I love “asides” … I went to the local “Stuff-Mart” just yesterday and guess what …  THEY ARE OUT OF ALL PAPER PRODUCTS!!!  NOOOOO!!! NOT AGAIN!!!!  It is true, no toilet paper, no paper towels, and no facial tissues.  Seriously, again people, what is the deal????  Food galore, anything else you could ever want, TV’s, clothes, whatever … but no freakin’ paper products?!??!?!  UGH!!!!)

     So, with all that has been going on, and appears to be happening again, I wanted to caution you about something in the insurance-verse that is starting to take a dreaded toll.  CANCELLATIONS FOR NON-PAYMENT OF PREMIUMS … Dun-dah-DUN!!!  Seriously though, this is becoming quite a huge factor with a lot of insured’s and carriers.  People either had to miss some premium payments, because it was that or put food on the table, or some just flat out forgot (we had life to deal with, INSURANCE OVERLOARDS!!!!! Geeze!!!)  The issues that are stemming from this however can be a bit dire. 

     Let’s say that for whatever reason, you missed a payment, just one … or a few (as some carriers allowed for a “Forgiveness” of a few months, which they then built into the subsequent payments, kind of like a “Balloon” payment option).  Now, you find out that the carrier has cancelled you policy for non-payment of premium.  OK, maybe that is not the biggest deal that you have had to deal with in 2020, but you want to make sure your “ass”-ets are covered.  What do you do?!?!

     Well, dear reader, that is why I, InsuranceMan 2.0!!! am penning this post to you today.  There may be a few options.  Let’s start with the best case scenario.  You get a hold of your insurance agent (which should be me … but I won’t “agent shame” you here), and you let them know what happened.  They console you and tell you they will get on the horn with the carrier and work some magic.  This is the best possible situation.  If they can get a hold of the underwriter and billing and let them know that you just could not pay at that time, but you are now willing to make up the payments and any future payments on a monthly basis (or in full, I have see that.  Where the caveat to reinstating the policy is that it must be paid off in full), and voilà, you have your coverage back, no harm, no foul.  They may ask for a No Known Loss Letter (NKLL), stating that you had no losses during that time, but again, no big deal.

     The second possible situation is that they will not reinstate the policy, but they may be willing to rewrite it.  If any premium is outstanding, they may require that to be paid, and then rewrite the policy with new dates, but at least you can get your coverage going again.  With a lapse, but still, you have coverage!  Nothing that cannot be overcome in a few years.  If you had not losses, OK, you are good to go.

     Then there is the possible last option, the dreaded, abhorred, loathsome, last option … the option that has spurring on the writing of this post.  If all else fails, and your carrier is not willing to reinstate or rewrite the coverage, and now you are stained with the hideous mark of a “CANCELLATION FOR NON-PAYMENT OF PREMIUM” you are headed off to the “The Brokerage”!!!  The land of Excess and Surplus Lines (E&S) coverage.  THE HORROR!!!!!!!!!  Actually, this is not that bad, nor is it the end of all things.  I actually quite like E&S carriers.  They do things no one else will, they can work you out of a pinch situation, and in many instances the coverage is just as good as what you were used to.

     The downside to this …  Yes, come on, you knew there was going to be a downside, there always has to be a downside to everything.  Premium.  When you are ineligible for coverage with a standard carrier, the E&S carriers know that, and if you have “THE MARK”, there is a bit of a risk involved (from their perspective), so, in order to take that risk, they are going to make it a bit more worth their while.  My experience has been that you can expect anywhere from a 1.5 to 3 times differential in premium.  If you were paying $5,000 before the cancellation for non-payment, the E&S folks will probably write your coverage for around $7,500 to $15,000.  I know, the irony here is palatable.  If you had this kind of dough during all of the rest of the year, you would have paid the dang premiums in the first place, how are you expected to pay a substantial increase.  Sorry, it is just the law of the land.  Higher risk (supposedly), higher premiums.

     One other precluding side-effect of a non-pay cancellation is that standard carriers may not be willing to take you on for a few years.  Some will after a clean track record of a year, others will be two … or longer, depending on the economy and “crystal ball” type stuff.  Good news is that you can get coverage, bad news is it may cost you more.  Don’t get down though, any agent (mmhumm … ME!) who know how to negotiate the “E&S” realm in the belly of the insurance industry beast will have options to assist in alleviating some of the heartburn via working out a premium finance option for you.

     In summary, if you have fallen victim to the difficult times of the recent past, whether I work with you or not, and you are looking for options to get your coverage back up and going or reinstated, turn on the Insurance Man 2.0!!!  beacon, or just give me a call or shoot me an email, and I will gladly come to your rescue.  I want you safe, secure, and insured.  Until next time dear reader …

 

Stay Vigilant,

 

Aaron Linden

a.k.a.  Insurance Man 2.0!!!

(307) 752-5961

aaron@roaringforkins.com      or     insuranceman2.0@gmail.com

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