The vast majority of people pay their bills, especially for insurance, on time, which is great because it’s becoming more important than ever to do so. On top of avoiding late fees, cancellation notices, and the risk of a lapse in coverage, rumor in the industry is that insurance companies will start using on-time payment history as a rating factor for insurance policies, providing a discount for those with good payment history.
Insurance companies subscribe to a service called CLUE (Comprehensive Loss Underwriting Exchange), which is used primarily for sharing claims information, driving history, etc., among insurance companies to ensure each company is privy to the same information when determining how to price a policy. More and more information is being gathered by the CLUE service, including prior coverage limits, length of time a policy was in force, and, you guessed it, payment history.
Following up on late payments and mailing cancellation notices is expensive for insurance companies, and analysis of massive amounts of data shows that people who consistently pay their premiums on time are less likely to have a claim. Therefore, we suspect that insurance companies will eventually reward those who regularly pay their insurance invoices on time with improved policy rating.
To encourage paying on-time, most insurance companies offer the option to have payments automatically withdrawn from a checking account or charged to a credit or debit card with little or no fees. Automatic payments are easy to set up and can be done online or by calling our office. If you don’t currently use automatic payments but feel it’d be advantageous to do so, please don’t hesitate to let us know.
We think it’s important to provide this insight before the potential rating change takes place because there is still time to improve payment history and, therefore, take advantage of the corresponding discount that will likely be associated with it in the future.