Dear Do-It Man: My parents are 83 years old. They have been with the Utah Farm Bureau Insurance forever and have never paid a single premium to any other insurance company for their cars, trucks or home. They have always actively supported the company and the Utah Farm Bureau Federation here in Utah.
Recent events in their lives:June 18: My mother left the state for one week to attend a family reunion with her cousins.
June 19: Utah Farm Bureau Insurance sent a premium notice for insurance on their 1979 Lincoln. The letter arrived when my mother was out of town and was misplaced with some personal papers. She never saw the bill.
June 25: My mother arrived home from the reunion.
July 5: She fell on a cement step taking dinner to a 97-year-old uncle.
July 8: She experienced continuing weakness on her right side.
July 9: She was hospitalized with a stroke that paralyzed her right side. She was transferred to a rehabilitation unit where she continues to convalesce. She has always handled the bookkeeping for the family business and paid all the bills. My father seldom makes a check as his hands shake - making signing very difficult.
Aug. 1: My father, driving the Lincoln, was in an accident at the high-incidence intersection of Highway 89 and Shepard Lane.
Aug. 2: He filed a claim at the Farm Bureau office in Salt Lake City. Back home, within an hour, he brought in the day's mail that included a letter from Farm Bureau Insurance dated July 28, stating the policy had lapsed because the premium hadn't been paid.
My complaint is that 40 days elapsed between the time the policy renewal notice was mailed (it was lost due to customer's human error) and the day we received the letter saying the policy had lapsed. The company made no other contact.
The company refuses to cover the accident.
Weren't my parents worthy of a notice on the premium due date of July 7, or on the grace period deadline of July 21?
What does the servicing agent do for a customer besides collect commission?
The investigating Utah Highway Patrolman went out of his way to be nice to my father. He remembered him from when he was a child and his father did business with my father. And the judge extended concern for my father out of respect for him.
The company failed my parents, who are longtime customers, by refusing coverage for this accident.
- H.S.H., Kaysville
Dear H.S.H.: Had your parents paid their premium by July 21 (July 7 plus the 14-day grace period), their coverage would have continued without lapsing. As it was, their coverage was canceled retroactive to July 7.
It is unfortunate your father was in an accident after the policy lapsed. We are sympathetic, but an insurance company is under no legal obligation to pay a claim that was filed on a lapsed policy.
A company is required by law to mail a premium notice that clearly states the amount of the premium. It must also explain that failure to pay the premium will result in cancellation of the policy. The insurance company met that requirement.
According to Greg Johnson, state claims manager for Farm Bureau Insurance, renewal notices are mailed out about three weeks prior to the renewal date. It sends a notice of cancellation after the grace period is up.
Whether or not an insurance company sends out a reminder between the time the original notice is mailed and the policy is canceled varies from one company to the next.
Farmers Insurance mails a reminder within a few days of the first notice. If you don't send in your money, the next notice you receive tells you your policy has been canceled. Farmers has a 15-day grace period.
State Farm, which has a 21-day grace period, sends the original notice followed by a reminder combined with a notice of cancellation if you haven't paid by the premium due date. It says that if you don't pay within the 21-day grace period, your policy will be canceled.
As far as contacting customers about a pending lapse, some agents do, some don't.
"We get advance notice of a policy that's about to lapse," said State Farm agent Uffe Traeden. "We make a phone call or send a memo to the individual."