Late and cancelation fees can eat you alive. On top of the billing fee, if you pay late, you might get charged as much as $10. Then, if your policy goes past the cancellation date, depending on the company, you might get charged another $25 to reinstate the policy. That’s $45 just in fees.
Non-sufficient funds fees are the worst. Let’s say you are on automatic payments, and the company already charges you $10 a month to send you an electronic bill notice to your email and phone. If your payment doesn’t go through because you didn’t have enough money in your account on the morning of when they were expected to draw, then the company will charge you a late fee of $10 and an NSF fee of $25. Now, if you don’t get paid for two weeks and your policy cancels by the time you have enough, they could charge you another $25 to reinstate. We are talking $70 in fees, not counting what your bank charges you for over-drafting your account.
This storm of fees happened to Steven in Cascade Locks, Oregon, one month. Someone hacked his card and took all his money. The bank stopped the card, but it took two weeks before getting a new one in the mail. While he waited for the disputed withdrawals to be put back into his account, he had no money to pay his premium. He forgot to call the company or me to stop the automatic withdrawal of his insurance policy for the month. The insurance company attempted to charge his account. His regular monthly premium was $56. The fees he paid, in the end, cost more than the premium.
The worst part of all this fee business for the agent is that we don’t get a commission on the fees! The company wants us to help collect them. Our compensation is only a percentage of the pure premium. So, as many have implied in the past, please know that fee money doesn’t go in our pockets.
We don’t charge fees on top of what the company collects. Some agents charge an additional broker and application fee. Plus, they will sell you an extra, fully-earned roadside assistance plan that you didn’t request. Before you buy, ask what fees are included in the down payment of your policy.