How to prevent an "NSF" cancellation

NSF means "Non-Sufficient Funds" in your account at the time a cheque is presented.

Many people are facing tough times right now. If you know that you cannot make your upcoming payment, then you have two options. The first is to cancel the insurance before the insurance cancels you. You have to write up a document stating your name, policy number and intention to cancel. The signature(s) has to be in writing. All "Named Insureds" on the policy have to sign the document. This document has to be sent to the insurance company. This would be a very risky thing to do with your home insurance.

This will take effect the day it is presented. If your policy is for automobile insurance, then you will not be able to drive your vehicle. A later-dated insufficient funds (NSF) will not enable the Insurer to cancel you for non-payment. You can also request that the bank stop payment on the withdrawal to prevent their NSF charges.

Be aware that if you cancel your insurance, then you will have a gap in your driving history. This can affect your rates. If you have a good driving record you might approach a friend or family member to use their vehicle on occasion. Provide your date of birth and driver's license and get added to their policy. This will also protect your continuity of insurance history.

The second option is to reduce your coverage on your vehicles. Consider higher deductibles on the collision and comprehensive portion. If this does not work, then you might consider taking off your liability and collision coverage. It would be prudent to reduce your coverage on your vehicle, so you at least have some "parking" insurance.

For home insurance, you can consider a higher deductible or lesser form of insurance to try and keep some coverage in place. This is too large an asset for you to not have some form of fire insurance.

If you have monthly withdrawals, it is important to be aware that most Insurers will take 21 days or so to process a change. You still could have the old amount taken from your account if there is not enough time for processing. If you need this done quickly, then you should be contacting your Agent or Broker and asking for "rush service".

It is better for your insurance record if you cancel the insurance. Any cancellation, lapse or refusal to renew by the insurer, must be reported on an application. If you have cancels for non-payment, you will have trouble getting a payment plan again. It could be very difficult for you to come up with a full year's premium.

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