Debt due to insurance

One of the reasons of getting into debt are unpaid insurance premiums. This is quite an issue we are struggling with apart from the failure to repay credits, loans, and bills for telecommunications services. It turns out that it stems from our lack of insurance education but very often also from simple heedlessness.

Despite that state institutions, insurance companies, and debt collection companies try to educate Poles and raise our insurance awareness, there is still a noticeable increase of indebted persons due to unpaid insurance premiums or subrogation.

The main reasons for this situations are primarily lack of knowledge and heedlessness. Many people does not realise e.g. what insurance obligations they have to fulfil after selling a car. Many Poles also forget when their policy ends. Therefore, it is worth to keep in mind a few important issues so that insurance does not become a financial problem:

1. Read the provisions - learn about your rights and obligations.

The main reason for debt origination due to unpaid premiums for the compulsory civil liability insurance of motor vehicles is still the simple lack of knowledge of provisions. We are not entirely aware what rights and obligations are connected with taking out and terminating the insurance. Many people think that the only obligation after the sale of a vehicle is to inform the Department of Transportation. Those people are not aware that within 14 days from the sale of the vehicle the seller has the obligation to inform the insurer about the change of the owner. The fulfilment of this obligation is very important because if the buyer does not report the sale of the car to the insurance company, the company will continue to consider the seller as the owner of the car and, therefore, request him to pay the premiums. Insurance contracts are automatically extended and it is very easy to duplicate insurance. However, if it happens, it is worth to refer to a relevant provision (art. 28A of the Act on compulsory insurance) to terminate the contract without additional burdens. However, conscientiousness is necessary not only in the case of sale and purchase of a car but also when changing the insurer. In such a situation it is crucial to remember about submitting a written statement of termination of the contract at least 1 day before its expiry.

2. Be careful.

Since the entry into the Polish market of the direct insurance policies sales channel (so-called Direct, i.e. taking out insurance via the Internet and telephone), there is a noticeable increase of persons who are convinced that they have never taken out insurance but only checked the amount of potential premiums in a premium calculator. Usually those persons do not read and ignore clear messages informing that by clicking the “Buy insurance” button on the website, they actually buy it. Also, some people still believe that the only possibility to sign a contract, including an insurance contract, is to sign its paper form. They are not aware that the Act of 2 March 2000 on protection of certain rights of consumers and on liability for damages caused by a hazardous product gives the possibility to enter into a contract via the Internet or by telephone. That is why the golden rule should be careful reading of all messages, pop-up windows, and small print.

3. Do not forget.

Write down the payment date for insurance in a notebook, calendar or telephone and do not underestimate the insurer’s reminders. You can also use the services available online which will remind you in due time about insurance via email. A very simple solution is to set up a standing order on your account. Even small arrears may develop into a large sum the one-off payment of which will become a great burden for the household budget. That is why it is good to be systematic and diligently watching over your liabilities on time.

4. Pay the claim due to insurance subrogation.

Another reason for arrears is debt resulting from insurance subrogation, i.e. the possibility the insurers use in order to recover the paid compensation. For example, in the case of flooding of a flat, the injured party receives compensation from their insurer. However, this insurer (pursuant to Art. 828 § 1 of the Civil Code) has the right to claim the repayment of paid compensation from the person who caused the damage. Thus, if we are responsible for a given event, the insurer will make such a claim towards us. Therefore, it is worth to read the correspondence, explain such situations, and do not ignore the liability in order not to get into debt.

5. Make sure that you have a voluntary civil liability insurance.

However, payments due to insurance subrogation can be avoided. Simply have a civil liability insurance. It does not have to be a high cost and such a solution gives a sense of security and helps to avoid incurring additional costs in difficult situations when we are the perpetrator of the damage (usually unintentionally). Despite that year after year we observe an increase in insurance awareness of Poles and at the same time the number of persons who take out civil liability insurance voluntarily, still most of us does not see the need of additional insurance. As a consequence, often there are situations in which these persons are confronted with the necessity to pay even several thousand zloty due to fortuitous events such as flooding the neighbour or doing some other damage to the neighbour's property. Such unforeseen situations very easily lead to debt which can be avoided if we are alert, systematic, and aware of our rights.