Youve had rough several weeks when you realize you forgot to make your car insurance payment and now your coverage has lapsed. Will your insurance carrier cancel your coverage, after all, it was just an honest mistake? Rewriting the insurance policy takes a lot of time and effort, not to mention, its more costly than just reinstating the policy. However, insurance wholesaler American Team Managers Insurance Services explains that to protect themselves, insurers will require you to sign a no loss letter before reinstating your policy.
What Is a No Loss Letter?
Also called a statement of no loss, the document states that you did not incur any damages during your lapse in coverage. You also affirm that you werent involved in an incident that would result in any claims being filed against you.
What Does a No Loss Letter Do?
A no loss letter protects the insurer from having to pay any damages for any losses, accidents, or circumstances that might lead to a claim during the time you didnt have coverage. Along with requiring you to provide a signed no-loss letter, the insurer will require you to pay the overdue premium and any penalties that have accrued before reinstating your policy. Ultimately you may end up paying higher premiums when it is time to re-rate your policy, but not having insurance could end up being far costlier.