Ever heard of Insurance Company sending insured (liability ins.) to collections for failure to pay premiums??

Question

Has anyone ever heard of an insurance company sending an insured to a collections agency for failure to pay premiums? In my experience, they would just cancel the policy. This is a liability policy. The insured made a claim and the insurance company informed the insured that his policy was cancelled for failure to pay premiums. Later, the insured received a collections notice in the mail for past due premiums for the relevant coverage period. This is odd, I've never experienced it.

Answer 1

No it is not odd, if you dont pay for the period that you did have ins,and was covered, then yes they will cancel policy and then send amount not paid for coverage period. Need to call ins company and find out what period of coverage that is needing payment.  They are usually very will to work with the client esp. if it is the first time with laspe in coverage.  It doesnt matter whether or not it is full coverage or liab.  it is still coverage.

Answer 2

Yes i work at allstate and this is true they will definetly put you in collections for non payment of premium

Answer 3

Yes, it happens all the time.  

Frequently, even after policy cancellation, there's a balance owed the insurance company, and it will be due.  On that liability policy, assuming you mean GENERAL LIABILITY, it's an "auditable" policy.  That means, they get to change class codes and exposure rating basis after the fact, to make it accurate.

If there was a claim, for something not covered, the policy can STILL be audited, and the additional exposures can STILL be charged for.   That doesn't give retroactive coverage for undisclosed operations.  

Real life example that I saw:   A demolition contractor represented himself as a carpenter, got coverage under a carpenter's bop (XCU exclusions applied).   A building he was tearing down, came down funny, on a parking lot full of cars.   Estimated damages around $150,000, claim clearly not covered under the policy form due to exclusions - claim is denied.  HOWEVER, upon audit, the class of operations was changed from carpentry NOC to demolition, resulting in a massive additional premium, AND, the claim still wasn't covered.

Answer 4

do it all the time...insurance companies are no different than any other company you owe money to.