Paying monthly on your business insurance, how does it work?
There are over 100 insurance markets in the Australian economy and some insurers do not offer monthly instalments.
So how is it possible you can pay monthly on nearly all insurance policies?
Premium funding is a process by which a third party funder pays your insurance and provides and monthly instalment service.
So how does it work?
You organise a quote for business or commercial vehicle insurance. You accept the terms and decide to go monthly. The monthly provider then pays your insurance policy in full and sets up a direct debit from your account.
To facilitate the monthly it comes at a cost, this includes debt collection, systems and management.
Premium funders will generally charge an interest rate of 7-8% for this process plus a one time application fee.
Canceling your policy
Say if you cancel after 6 months you can instruct your broker.
What happens next? The broker instructs the insurer to cancel the policy.
Sometimes the insurer can take 3-10 business days to respond.
Once the broker has the confirmed refund, they will deduct non refundable fees from the refund.
The non refundable component consists of broker income, interest on the funding loan.
They will then send the refund to the premium funder.
The instalment provide will calculate how many instalments you have paid and whether or not there is an outstanding amount and will contact you to discuss the matter.
Cancellation can take 10 business days to process.
Premium funding means insurers don’t need to employ staff and manage debt collection so often insurers who don’t provide monthly will offer a lower premium rate to compensate for this saving.
Speak to an Insuregroup representative about premium funding