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The car & home insurance company charges an $8 penalty for each payment when people don't sign up for their monthly automatic payments by ACH from a bank account, unless the whole year is paid for in advance.
Is that legal for them to change monthly payment penalties for not having access to people's bank accounts?
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
44,839 posts, read 81,846,971 times
Reputation: 58241
Yes, perfectly legal. I would change companies. My car insurance is paid every 6 months, online using their App, and homeowner's is included in the mortgage payment, also paid online monthly along with the tax.
Yes, perfectly legal. I would change companies. My car insurance is paid every 6 months, online using their App, and homeowner's is included in the mortgage payment, also paid online monthly along with the tax.
Switching companies might not change anything. More and more insurance companies are charging more for monthly pay. I pay on the same schedule you do but the last two auto insurance companies I had added fees if you wanted to pay monthly
My life insurance is cheaper if I pay for the full year in advance versus monthly. It's better to pay all of it up front since keeping it in the bank isn't making anything, plus they let me pay with a credit card so I can also accumulate reward points. Also it simplifies my life to be one and done for the year.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
44,839 posts, read 81,846,971 times
Reputation: 58241
With car insurance on 3 cars and a travel trailer, it's close to $1,000 every 6 months, and I can plan ahead for the expense in May and November. Also, when I pay it reminds me to put the new proof cards in my wallet and the cars.
Actually, the OP is looking at the situation backward. The insurance company is actually giving a discount if you pay the policy for a year in one lump sum. Otherwise, you'll pay the full policy premium if you string it out over 12 months.
The reason for this is simple: The less bookkeeping work they have to do, the less it costs them to manage your account. Why should someone who pays his insurance for the whole year with one check have to subsidize the person who makes payments every month and thereby causes the company to have to do much more accounting and record keeping work?
Actually, the OP is looking at the situation backward. The insurance company is actually giving a discount if you pay the policy for a year in one lump sum. Otherwise, you'll pay the full policy premium if you string it out over 12 months.
The reason for this is simple: The less bookkeeping work they have to do, the less it costs them to manage your account. Why should someone who pays his insurance for the whole year with one check have to subsidize the person who makes payments every month and thereby causes the company to have to do much more accounting and record keeping work?
This. I always ask insurance carriers what various payment schedules/transaction options cost up front. When the policies are up for renewal I ask again. Things change. Sometimes they'll try to go back to their preferred default if you don't double check it.
Always have charged more for monthly, in my experience.
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