Consequences of Delayed Insurance Renewal (Essay Sample)

Consequences of Delayed Insurance Renewal
While it is good to get an insurance cover for your business, it is also prudent to maintain good terms with the insuring company. One of the ways to do this is to always make sure your policy renewals are due in good time. Letting your renewals to delay will have negative impacts to you and consequently causing your business to run into a loss.
Termination of the cover
Any insurance company allows for grace duration. The company sets the deadline date within which the renewal of the insurance cover should be done. Grace duration is the additional time that the insurance company gives to those who still have not renewed their policy to do so. In most cases the period is 30 days. After this period the insurance company has the mandate to terminate your policy. When this policy is terminated, the implication is that you cannot be compensated in the occurrence of loss even if the cause is one of the risks you had insured against.
Premium increases
At times people wonder why all of a sudden their premiums increase by a large amount. The premiums payable greatly depend on your credit history. The insuring company uses a standard criterion to determine the credit performance of a person. If at one time you delayed in the renewal of your policy, this will negatively affect your credit performance. The insuring company exorbitantly raises your premiums on the argument that you are a high risk member. Moreover some insuring companies impose a certain percentage of money payable in addition to the premiums depending on the duration the renewal delays as a penalty to the insured.
Rejection
This happens when your policy is terminated by an insurance company and you are applying to a new one. When this new insurance company looks into your history and discovers that your policy was terminated by the previous insurance company due to delayed renewal, they can reject your application. However, if they are going to accept your application, you will be required to pay high premiums. This is because your credit history is considered when determining the premiums you should pay and you are recognized as a high risk customer to the insurance company.
Lack of compensation
Delayed renewal of the policy can have adverse effects. If you delayed to renew your policy, given the grace duration and still you could not make to renew the cover, the insuring company may decide to terminate your policy. If in the event something happens that causes your business to incur a loss, then the insurance company will not compensate you even if the risk causing loss was covered in the policy you had...