Financing Insurance in the New Year

An important requirement for motor vehicle ownership is insurance.  Apart from it being mandatory, it provides significant benefits to motorists in the event of theft, damage, injury or death depending on the type of coverage.

Insurance coverage is either third-party or comprehensive.  Third-party compensates for one’s legal liability for property damage, injury or death to third parties resulting from a motor vehicle crash.  Comprehensive insurance, on the other hand, provides coverage of legal liability to third parties, and theft and damage to one’s own vehicle.

As motor insurance is a recurring expenditure each year, it is prudent to budget for it so that spending can be prioritised in advance to ensure that funds are available to renew the insurance policy when it comes due.

Christopher Knight, a chemist, related that he has a systematic arrangement in place for the renewal of his auto insurance every November as driving without insurance is an unwise risk he said he would never take. 

“During the course of the year, I have dedicated amounts [of] salary deduction that goes to my credit union.  It is not exclusively for the insurance but it is for expenditure of that nature that I use the credit union money for,” he explained.

For Marcus*, an electrician, he too has an established plan to fund his insurance policy annually.

“My insurance is due in March.  So every year, I set aside my NHT (National Housing Trust) refund to renew my insurance,” he disclosed adding that the advance preparation ensures his motor vehicle is always compliant with the law.    

Chris Hind, General Manager, JN General Insurance Company, underscored that insurance protects motorists in the event of an unfortunate situation relating to their vehicle.

“Without insurance, potential expensive repairs for damages and medical bills incurred will have to be paid out of pocket. These costs can be overwhelming in the absence of the protection of insurance. Having auto insurance is absolutely essential to stave off crippling expenses,” he said.

He pointed out that financial constraints including those caused by the COVID-19 pandemic, may impact the spending power of some motorists, causing them to delay renewing their insurance.

”If you are having a challenge paying the premium, talk with your insurer who can work out a payment plan for you or point you towards premium financing. Insurance companies often facilitate instalments,” he advised.

The insurance professional emphasised that motorists can save on the cost of insurance premiums by becoming aware of the factors that are considered in the price for coverage.

“Major factors in the cost of an insurance premium include the insured’s age, driving experience and record, as well as the use and type of vehicle being insured. Drivers with a good driving history one will pay less for insurance,” he explained.

“In addition, you could lower your insurance premium payment further by completing a driver improvement programme with a reputable institution, such as the Jamaica Automobile Association. This will improve your risk profile, as it gives you experience in handling dangerous road conditions.”

Gresford Dinald, Sales Manager at the Insurance Premium Financing Unit, JN Bank, pointed out that motorists who are challenged with coming up with a lump sum payment for insurance may consider insurance premium financing.  

“One of the greatest benefits of insurance premium financing is that persons do not have to commit all the money up front, which gives them better opportunities to manage their money. Applicants are only required to pay an initial 20 per cent of the insurance premium and they are given up to nine months to repay the balance.  The process is quick as the funds are disbursed within 48 hours after submitting the required documents,” he related.

“Unlike other types of loans, no collateral or security is required for premium financing as the insurance policy is accepted as collateral for the loan. While a bank loan can be used for other purposes, premium financing is only applicable to paying auto, property and general insurance,” he explained.

*Not his real name