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The in­surer re­jected Mr M’s claim on the grounds that he had failed to pay his pre­mium for Oc­to­ber. The pre­mium was due on Oc­to­ber 4. But when King Price sub­mit­ted the debit or­der, it was re­turned un­paid. A sec­ond debit or­der was sub­mit­ted on Oc­to­ber 19, but it was also re­turned un­paid.

Ac­cord­ing to King Price, the sec­ond debit or­der was sub­mit­ted in ac­cor­dance with the 15-day grace pe­riod pro­vided for un­der the Pol­i­cy­holder Pro­tec­tion Rules (PPR). In sub­mit­ting the sec­ond debit or­der, King Price said it had com­plied with the rel­e­vant rule and that it was ac­cord­ingly en­ti­tled to de­cline the claim.

The rule states: “An in­surer shall en­sure that a pol­icy con­tains a pro­vi­sion for a pe­riod of grace for the pay­ment of pre­mi­ums of not less than 15 days af­ter the rel­e­vant due date.”

The pro­vi­sion makes it clear that in­sur­ers must in­clude a clause in their poli­cies stat­ing that if a pre­mium is not paid for a spe­cific month, con­sumers have the grace pe­riod within which to pay it. In Mr M’s case, the sec­ond debit or­der was sub­mit­ted on Oc­to­ber 19, which was 15 days af­ter the first sub­mis­sion.

King Price ar­gued that the grace pe­riod re­quired by the rule af­forded Mr M 15 days within which to pay the pre­mium, fail­ing which he would re­ceive no cover, and that once the grace pe­riod had ex­pired, and if no pre­mium was paid, the in­surer was free to take puni­tive ac­tion against Mr M, such as can­celling his pol­icy or re­pu­di­at­ing a claim.

The om­buds­man, af­ter con­sid­er­ing the ar­gu­ments by both par­ties, found that King Price’s in­ter­pre­ta­tion of the rule was cor­rect. “The in­surer may sub­mit a debit ear­lier than day 15, but will not be en­ti­tled to take any puni­tive ac­tion against the in­sured un­til the ex­piry of the 15 days,” the om­buds­man said.

She found that, in at­tempt­ing to ef­fect a sec­ond de­duc­tion on day 15, King Price had sat­is­fied its obli­ga­tion in re­la­tion to the PPR, and she found that the in­surer had com­plied with its statu­tory re­quire­ments and was en­ti­tled to re­ject the claim.

joseph.booy­ • Does your mo­tor ve­hi­cle pol­icy pro­vide cover for pot­hole dam­age? Read your pol­icy and know your cover. • Times are tough, but don’t sac­ri­fice your short-term in­surance cover to save money. Pay your pre­mi­ums to avoid a fi­nan­cial dis­as­ter. • Mo­tor ac­ci­dents are the most com­mon rea­son for in­surance claims. If you have a ve­hi­cle, you need cover to pro­tect you, your ve­hi­cle, your pas­sen­gers, other drivers and pedes­tri­ans.

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