In recent years insurance companies have started to introduce monthly rolling policies, also known as continuous policies, to accommodate a range of insurance requirements but what is a monthly rolling insurance policy and what are the advantages and disadvantages of a monthly policy to the policyholder?
What is a monthly insurance policy?
The first thing to establish with a monthly insurance policy is that it is different from an annual insurance policy that is paid on a monthly basis.
Most insurance policies are an annual contract of insurance where the insurance company agrees to provide protection in respect of the risks insured for a period of 12 months from the inception date. In return the client agrees to the payment of a fixed annual premium. To ease the burden of the cost of the policy many providers offer a direct debit facility or premium financing in order to fund the cost on a monthly or periodical basis.
The policy will expire on the renewal date unless the insurance company has offered renewal of the policy and you have accepted that renewal. This does not represent a monthly policy, as the client you are responsible for the payment of the premium in full and the penalty for not meeting this commitment will differ from one policy or arrangement to another.
The monthly insurance or continuous policy is entirely different arrangement with your insurance company.
The actual mechanics of a monthly policy varies from provider to provider but the details are broadly similar.
When you accept a monthly insurance policy you will be told what the monthly cost of the policy is and if you wish to take this option it may only be paid by direct debit on a monthly basis to the provider. The cover remains in place on a monthly basis whilst you continue to make the direct debit payments. For most insurers, when you accept the monthly policy you do actually commit yourself to the contract for a minimum period of 12 months and you do need to check the terms of any policy that you buy.
What is the difference between a rolling monthly and continuous policy?
Some insurers describe their monthly rolling policies as a continuous insurance contract. As with many other issues this view depends upon your perspective. Whilst the contracts are in effect continuous they can be modifed and altered by either party at their discretion and subject to the terms of the policy.
What are the advantages of a monthly rolling policy?
Providing that you continue to make your direct debit payments your insurance policy will remain in force. The cost implications on monthly rolling policies may also be advantageous as the direct debit under these policies does not attract an interest charge unlike most annual premiums when paid my monthly direct debit.
What are the disadvantages of a monthly rolling policy?
Clearly you need to make sure that you make the monthly direct debit payments but also without the benefit of an annual renewal notice you may not be as aware of the opportunity to compare premiums from other providers on an annual basis when the policy is due for renewal.
Additionally, you have a continuing responsibility to ensure your policy details and information are correct on a monthly basis rather than on an annual basis. This would apply predominantly to material facts such as any convictions rather that issues relating to the cover or changes in risk such as a change in occupation or additional employees which you would need to declare on an ad-hoc basis.
Can I cancel my monthly insurance policy?
Most monthly policies are issued on the basis of a minimum term of 12 months. After that time you are free to cancel your policy at any time by informing your insurance company and//or cancelling your monthly direct debit.
Can I obtain other insurance quotes whilst I have a monthly insurance policy?
Yes, subject to the the terms of your policy. Effectively this means that you are free to obtain other quotes and move your insurance to another provider once the policy has been in force for 12 months.
What types of insurance are available on a monthly policy?
The monthly premium policies are particularity prevalent in professional indemnity insurance, directors and officers liability insurance and public and employers liability insurance although there are other classes may be available in the future.
Can the insurance company increase the premium on my monthly insurance policy?
This depends on the wording of the policy that you have for some premiums can be changed on an ongoing basis, for some this can only happen after the first year of insurance and for others there is an annual review date when you may be asked to check that the information is still correct and that the policy meets your requirements and the ongoing premium confirmed to you. If the insurer wishes to change your premium then they must advise you in advance and in accordance with the rules applying to direct debits.
Is the monthly policy the same as a short term policy?
No the monthly policy is intended as a continuing and ongoing insurance arrangement between you and your provider, the minimum term of 12 months is utilised by insurers to prevent the contract from being used as a short term policy on an ad-hoc basis. Short term insurance policies are however available for a wide range of insurance risks but tend to be priced higher than the annual premium on a pro-rata basis for the same period.
How can I obtain quotes for monthly insurance policies?
You can apply on-line or call us direct to discuss your requirements. Not all insurance companies provide a rolling monthly or continuous policy option and we shall advise you where these are available.