Father Sez

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Insurance auto renewals may need insurance

Wednesday February 27th, 2008 by fathersez

We have an investment property, a house which is tenanted by a really nice family. We have a mortgage on this house at rates that make me the prize financial chump of the year, and a few years back. But this prize chump title is not what this post is about.

The mortgage is from one of the biggest Malaysian banks, a bank which has had my custom for many years. We have also taken the mortgage decreasing policy as well as the fire policy from this Bank’s insurance arm.

The loan was taken when I was at my previous job, so the servicing branch was near my then office. This year we transferred the loan to a branch near our home. Though the instruction to transfer was given in March 07, the transfer took place in August 07.

I did not think about the insurance at all. After all, when the loan was taken there was an express condition that the property should be insured for RMXXX with an insurance company acceptable to the lender…blah, blah, blah.

When we took the insurance, we also gave instructions for auto renewal. Hence we could sleep easy. When the time came for renewal, the Bank and the insurance company’s computers would do their thing. A click here and a click there, a whirr here and a whirr here and presto, my account would be debited with the premiums.

Late last week, I was looking for some documentation on the renewal and found none. I thought I had misplaced it and called the insurance company’s customer service people for a copy.

They told me that per their records the policy had been cancelled. 

Wow, they had cooly cancelled the policy and not informed me. A policy that had been assigned to them, a policy that gave them as much protection as it gave me. A policy for which no marketing needed to be done.

And they  had just cancelled it. And this is the Bank that had been kind and thoughtful enough to send me a birthday card.

My wife is now following up with the branch to find out how this happened or whether we were just misinformed about the cancellation.

Yesterday, the staff concerned was on leave. Today she is busy and has to check with something or someone. I hope this issue is settled soon.

I have learnt a lesson, that may be worth repeating to those of us who are in a similar situation. An insurance renewal is easy to overlook. Assuming that the Bank, with all its fancy computers and programs would know what to do may not be that wise.

I shall have to update my timetable to check when the renewal time comes. No longer am I going to act smug, expecting the Bank to do my job for me.

I wonder what would have been the Bank’s stand should there have been an accident or mishap on the property during the months when the policy was dead. Secondly, would  the policy be issued from current date or backdated.

I hope I don’t have to find out about the former. On the latter, I shall know soon enough.

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