Few things are as stressful as being unable to pay your bills on time or at all. Canada is in the throes of an economic downturn because of the COVID-19 pandemic. As a result, many Canadians are undoubtedly feeling the financial pinch.
Money may be too tight to mention, but that won’t keep your monthly bills and financial obligations at bay. That may mean you’re in an uncomfortable position, especially if you miss a payment on your home, condominium, or auto insurance.
A recent Leger survey asking Canadians for their views on the coronavirus pandemic and its impacts on our financial wellbeing illustrates the concerns many of us share, including:
- 92% believe COVID-19 is a threat to the Canadian economy
- 65% believe the worst is yet to come
- 54% say the coronavirus outbreak threatens their finances and retirement savings
- 45% are experiencing a decrease in income
- 27% are worried they will not be able to pay their bills on time
- 22% say they will have problems paying their mortgage or rent
I can’t pay my monthly auto insurance premium because of COVID-19. What should I do?
Not paying your auto insurance premium on time can lead to problems, especially if you do nothing about managing the situation. So, don’t shrug it off and wait to see what happens. Immediately call your insurer or broker and give them a heads-up you’re in a pickle. You may find it encouraging to know many insurance companies are being flexible by adapting their business practices to help their customers in these trying times.
For instance, if the province you live in has declared a state of emergency like in Ontario and Alberta, many insurers are forgiving their policyholders for missing a car insurance payment. Some are allowing their customers to defer their monthly premium payments and are spreading them out over the rest of the year, as well as waiving any non-sufficient fund (NSF) fees. Others are extending their grace periods for renewals and payment dates.
It’s important to know that if you miss more than one payment, it may reap significant consequences. Having a history of non-payments may result in a few repercussions such as:
- You may be classified as a high-risk driver, which makes getting a low premium problematic
- You could face difficulties getting car insurance coverage from other insurers in the future
- Missing multiple insurance payments may stay on your insurance record for up to three years or more
- If you don’t pay your outstanding debt, the insurer may send it to a collection agency, which can negatively impact your credit score
- Your auto insurance policy may be terminated. That means you cannot drive your vehicle as it is illegal to drive a car anywhere in Canada without insurance
If you’ve been laid off from work or your hours are reduced because of the COVID-19 lockdown and are worried about paying your car insurance bill, there are things you can do to mitigate the situation. For example, since you’re not driving as often as you usually would if at all, consider suspending or reducing your auto insurance coverage until things turn around.
I can’t pay my monthly home insurance premium because of COVID-19. What should I do?
Missing a home insurance payment can also produce unpleasant outcomes. Indeed, you are not legally required to have home insurance in either Ontario or Alberta, but most mortgage lenders require you to have it. On that note, many mortgage lenders are offering deferrals on their mortgage payments for homeowners affected by COVID-19.
Home insurance providers are also making efforts to assist their policyholders facing difficulties paying their monthly premiums. Some are offering flexibility on scheduled billing dates to give you extra time to pay. Other insurers may temporarily suspend policy terminations and NSF fees for missing payments, as well as defer policy renewal dates. The key is you need to proactively reach out to your home insurer to find out the options available to you.
However, if you miss multiple home insurance payments, your policy may be terminated. Should that happen, getting a new home insurance policy at a low rate will be tough. You could be labelled a high risk, meaning insurers may not extend coverage to you, or if they do, you may face having to pay a higher premium. If you are unable to pay your monthly home insurance premium, contact your provider or broker and find out what options you have to work through the problem.
What else can I do if I can’t pay my insurance bill on time?
Outside of communicating the difficulties you face directly to your insurer, if you are worried about making your home, condo, or tenant insurance or car insurance policy payments on time, here are a few additional things you can do:
- Talk to Your Bank or Credit Union. Beyond mortgage deferrals, financial institutions may offer other measures to help you deal with a cash crunch during the pandemic if you have become unemployed. For instance, some banks will let you defer payments on your home equity line, line of credit, or credit card. You should also ask your financial institution about adding overdraft protection to your account.
- Apply for Government Assistance. The Canadian government’s Canada Emergency Response Benefit for individuals offers up to $2,000 per month for four months for people left unemployed by COVID-19. The feds have also increased the Canada Child Benefit by $300 to $550 for the average family. They are offering a one-time Goods and Services Tax (GST) credit payment for low-income individuals and families. Moreover, the government is allowing Canadians extra time to file their 2019 income tax returns and deferring any outstanding balances owed to the government to August 31, 2020, without incurring interest or penalties.
- Reduce Other Monthly Expenses. Take stock of everything you typically pay for each month. For example, what streaming subscriptions do you have? Do you need to subscribe to more than one video-streaming service, or can you cancel one and save a few dollars? What about your home and wireless internet bill? Canada’s top three telecommunications providers are offering their customers the opportunity to defer their monthly bill. They may also temporarily waive roaming and data overage fees. Give them a call and find out how they can give you a break until things get back to normal