Insurance Pro Rata Payments

[SpierTier.]

I recently cancelled my insurance and signed with a broker for new insurance.

I'm supposed to pay pro-rata which is fine, but they want me to pay my normal insurance premium, plus the pro-rata amount in the same month? Is this normal? I've never experienced this.

 

[Drifter]

Yes, this is normal. The pro-rata if for the current month, the full premium if for the next month. Insurance gets paid in advance.

 

[SpierTier.]

Yes, this is normal. The pro-rata if for the current month, the full premium if for the next month. Insurance gets paid in advance.

Strange that my previous insurance didn't do this.

I actually went back to go check my first premium with my previous insurance and I only paid the pro-rata amount. The following month the normal monthly premium was deducted.

 

[Binary_Bark]

It is quite normal, when I moved my insurance they inform you of the premium and then give a notice that the first premium that would be deducted, would be higher than the normal monthly premium

 

[SpierTier.]

Okay. Just thought they wanted to pull a fast one

 

[zippy]

Yes, this is normal. The pro-rata if for the current month, the full premium if for the next month. Insurance gets paid in advance.

That doesn’t make sense. You pay for the period you are covered. If you have to pay the full premium for the next month, how is it that you pay pro-rata for the current month. If your insurance was paid in advance then you all ready paid for the current, last month.

I’m sure it’s the other way around? The pro-rata is for the last month you are covered and implies the OP isn’t covered for the full next month, only a portion, and therefore the cancellation is effective some time during the next month.

I also assume the OP is paying monthly. If you pay annually, then you will get a pro-rata refund based on the number of days in the year that the cover is no longer required.

I work in motor/home/travel insurance and particularly in the premium side of the coding so I know how the algorithms work, at least as they pertain to U.K. legislation. Maybe SA allows cancellation penalties which changes the way settling final premiums work.

 

[Drifter]

If you take out insurance you pay from date of inception. If you want cover from, say the 15th to the end of the month, you need to pay for that cover.

 

[Zuner]

You pay for the period you are covered.

Wrong, you pay for the period you WILL be covered for. Hence you pay in advance.

so the pro rata is for the remainder of this month, and also a full premium to pay for next month since its paid in advance.

 

[yebocan]

I recently cancelled my insurance and signed with a broker for new insurance.

I'm supposed to pay pro-rata which is fine, but they want me to pay my normal insurance premium, plus the pro-rata amount in the same month? Is this normal? I've never experienced this.

What date did you specify new insurance to kick in? Prorata is when you do a mid month change, all works out if old insurance runs to the end of the current month and new one kicks in the 1st of the following month.

 

[Hemi300c]

That doesn’t make sense. You pay for the period you are covered. If you have to pay the full premium for the next month, how is it that you pay pro-rata for the current month. If your insurance was paid in advance then you all ready paid for the current, last month.

I’m sure it’s the other way around? The pro-rata is for the last month you are covered and implies the OP isn’t covered for the full next month, only a portion, and therefore the cancellation is effective some time during the next month.

I also assume the OP is paying monthly. If you pay annually, then you will get a pro-rata refund based on the number of days in the year that the cover is no longer required.

I work in motor/home/travel insurance and particularly in the premium side of the coding so I know how the algorithms work, at least as they pertain to U.K. legislation. Maybe SA allows cancellation penalties which changes the way settling final premiums work.

Okay. Just thought they wanted to pull a fast one

This is how it works:-
You pay in advance.
15th March cancel old policy - get refund till end of the month.
16th March inception of new policy - Deduction in April will be the March prorate and April premium. You can, and ask about it, do a EFT for the March bit now to ease the April deduction. Most decent FSP's will allow this.

 

[SpierTier.]

What date did you specify new insurance to kick in? Prorata is when you do a mid month change, all works out if old insurance runs to the end of the current month and new one kicks in the 1st of the following month.

I pay on the 15th of each month. When I called to cancel old insurance I asked if I'm still covered for said month, they said no I pay for the month I am in, which makes sense now because as earlier stated when I initially signed up, I only paid a prorata amount from the middle of the month till month end.

 

[Zuner]

This is how it works:-
You pay in advance.
15th March cancel old policy - get refund till end of the month.
16th March inception of new policy - Deduction in April will be the March prorate and April premium. You can, and ask about it, do a EFT for the March bit now to ease the April deduction. Most decent FSP's will allow this.

I pay on the 15th of each month. When I called to cancel old insurance I asked if I'm still covered for said month, they said no I pay for the month I am in, which makes sense now because as earlier stated when I initially signed up, I only paid a prorata amount from the middle of the month till month end.

Strange cause how i understand it and how my insurance is, that you pay for next month.

16th March inception of new policy - Deduction in MARCH will be the March prorate and April premium.

Maybe things have changed but when i bought my car 9 years ago insurance started 23 of the month and the debit order that SAME month was for the 7 days remaining of the month and the whole next month. you pay ahead, even my cellphone insurance was like this and that was taken about 3 years ago.