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Be careful trying to prepay insurance

Discussion in 'Accounting & Tax' started by wylie, 22nd Jun, 2015.

  1. wylie

    wylie Moderator Staff Member

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    I had a brainwave last week to prepay our IP insurance (four policies due in the first fortnight of July - bummer).

    I called the insurer and cannot prepay so I asked about cancelling the current policies and starting them exactly the same but in June.

    I was told the underwriter had changed, and that would mean I'm taking insurance with a different underwriter and the price may change. One house we did the exercise for jumped from approx $950 to more than double (over $2K) with no changes whatsoever. That is just crazy, and obviously, I left things just as they are.

    Thankfully I checked before just blindly rushing in.

    This could be a trap for anybody else looking at this as a way to bring expenses into this month.
     
  2. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Prepayment of insurance does require a new policy that has a term NOT EXCEEDING 30 June 2016. Prepayments must always satisfy the 12 month limitation. A good example is a policy due to expire 29 June 2015 and renewing to 30 June 16. You can prepay it by paying this week. But if you called the insurer and ask for a policy ending 29 June 17 then the exercise is futile.

    And yes then you have found the issue of insurers who change underwriters. Business policies have that issue all the time.
     
  3. EN710

    EN710 Well-Known Member

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    How far ahead were you planning to prepay Wylie?

    I pay yearly, and the bill always come up approx. 3 months early - just got my insurance bill for a policy that's not due until September :p
     
  4. wylie

    wylie Moderator Staff Member

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    I have policies due for payment just into July but my insurer confirmed that I cannot prepay them. There is automatic billing set up to come from my account. I will call again and check that this cannot be done, just in case the person got it wrong, but he did refer it to a supervisor. I will certainly make a second call to check. Thanks everyone.
     
  5. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Terminate policy and start new policy?
     
  6. wylie

    wylie Moderator Staff Member

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    Terminate policy and start new policy was where the jump from less than $1K to well over $2K came into play... so I left that alone.
     
  7. wylie

    wylie Moderator Staff Member

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    Called just now to double-check this, and it is Youi-specific. Because everything is automated I cannot bring forward the payment into this financial year. Chap I spoke with said he has been asked this plenty of times just lately, so clearly I'm not alone in trying to bring my payment forward.
     
  8. Burramys

    Burramys Well-Known Member

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    Interesting. Most years I pre-pay. A number of enties insist that pre-payment is not possible, that payments come out automatically, monthly or whatever. Prepayment is made, and the next invoice shows credit.
     
  9. Chilliblue

    Chilliblue Well-Known Member

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    My insurance invoices also come up to 90 days in advance so no issues on paying. What company Wylie?
     
  10. wylie

    wylie Moderator Staff Member

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    Youi. So far very happy with them so this is just something I have to accept. Apparently no changes due to all being automatic and on line.