Programme: Diploma in Financial Planning 1.10. Larry's claim for damages to his vehicle, after a hailstorm, which took place on the 10 in of April, was rejected by his Insurer. The grounds hereof was as a result of Larry failing to make payment of his premium for April. Larry's premium is debited on the 26 th of the month ( 26 March in this case). However, the premium was returned as "unpaid". The Insurer then submitted another debit order on the 11 th of April ( 15 days after the agreed debit order date). Once again, the debit order was returned "unpaid". Choose the correct statement. A. Andrew's policy lapsed the moment the first debit order was not successful. B. The fact that Andrew has never missed a premium before will count in his favour when submitting a complaint to the Ombudsman for Short-term Insurance. C. The Insurer is entitled to reject the claim based on the missed premiums. D. The Insurer is acting contrary to law, as at least 30 days have to be given to Andrew to pay the missed premium. E. None of the above
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The Deep Dive
In situations like Larry's, the vital concept of premium payment is essential to maintain an active insurance policy. Typically, insurers require that premiums be paid on time to ensure coverage. If a premium is returned unpaid, it can indeed lead to the policy lapsing, depending on the insurer's terms and conditions. This highlights the importance of maintaining timely payments to avoid any nasty surprises during a claim. Now, the good news! If it’s established that the insurer failed to follow their own procedures regarding notifications about missed payments, Larry may have a case to argue. Insurers usually have a responsibility to notify policyholders if premiums are unpaid, giving them a chance to rectify the situation before a claim is rejected. Proper communication is key in any financial plan!