Is auto insurance a utility bill?
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UPDATED: Oct 19, 2021
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Any invoice sent through the mail with a request for payment is commonly called a bill. Calling a financial obligation “a bill” is acceptable vernacular in general terms.
When required to use specific terms, stating the proper terminology is necessary. A mistake to be avoided entails referring to a car insurance policy’s “premium payment due notice” as a utility bill. Such an assessment is inaccurate and might cause some trouble.
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How is an insurance contract defined?
The correct definition of an insurance policy entails referring to the policy as an indemnity contract. An indemnity contract is one in which an insurance company compensates the insured for valid, covered losses under the policy. It’s a service provided by a private company-your insurer.
Even though most drivers make monthly car insurance payments, just like they make a monthly payment for each utility expense, a car insurance policy is not a utility bill.
Auto liability coverage, for example, protects the insured against any bodily harm or death to persons or damage to property up to the limits of the policy.
If the auto insurance liability limit is listed at $300,000 per accident, then $300,000 is the maximum indemnity.
Comparison shopping for the most appropriate coverage limit is advisable since anything beyond the coverage limit won’t be paid for by the insurance company. The insurance company and the insured are bound by the contract terms.
Any losses outside the contract must be paid for by the insured.
Both the insured and the insurance company have an obligation to pay. Failure to meet payment obligations creates trouble.
The insured is required to pay the necessary premiums to keep the policy active for a specified term of one year. Failure to pay the premiums by the due date — and within a grace period if so afforded — leads to a cancellation of the policy.
Until the policy is reinstated, no insurance is in place. In addition to likely violating state law, a lack of insurance puts a driver at severe financial risk.
Auto insurance companies may deny claims, but only for valid reasons.
- Insurance fraud would be an obvious reason why an insurance company denies a claim.
- Waiting too long to file a claim would be another.
- Filing a claim without the proper coverage is yet another. An example of this would be to file a collision claim without collision insurance in place.
Insurance companies cannot deny valid claims for arbitrary reasons. The insured could sue the insurance company in court for bad faith in such instances. How the court rules in the matter is not always certain, though.
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How is a utility bill defined?
By definition, a utility company provides “electric, gas, water, telephone or cable to the general public.” Insurance is not so conspicuously missing from this definition.
A utility account can be made in the name of a person or a business. Companies that provide utility services to the general public are called public utilities, even though they may be private companies. The bills received from public utilities for these paid services are considered utility bills.
Sometimes, the utility company requires a deposit in order to turn on the initial utility service.
Utility bills, generally, do not require payment in advance. The bill logs the previous month’s usage and a fee for the usage is levied against the account holder. Failure to pay the bill may eventually lead to the utility in question being turned off.
The utility could turn the account into collections and even file suit to recover the money owed.
If failure to pay a utility bill leads to a bad mark on one’s credit, an auto insurance policy may end up being affected. Poor credit may lead to paying a much higher rate on an auto insurance policy than would be the case with good credit.
How to prevent confusion?
Confusing an insurance contract with a utility bill might cause some trouble. Commonly, requests for proof of residency may require presenting a utility bill. The DMW may request a utility bill to verify your address.
Anyone who brings an auto insurance policy statement by mistake may be sent home to return another day with the acceptable document. If you need to show proof of residence at a specific location, you may need to provide a utility bill. Some insurance companies may accept a car insurance bill as proof of residence, however, it’s up to them to decide if car insurance counts for this purpose.
Taking a deduction on state or federal taxes by adding insurance costs in with utility deductions might lead to some more significant problems. An inaccurate deduction might open doors to an audit or worse.
Understanding the proper delineation of an auto insurance policy vs. a utility bill does keep people from experiencing unwanted hassles.
Know the correct terms and definitions of the following:
Good personal and fiscal management dictates as much.
While not a service agreement like a utility bill, an insurance contract does help with certain needs. Those who want the maximum amount of coverage protections in place can add various different levels of coverage.
Comprehensive, collision and uninsured motorist are among the coverage options available. Adding more layers of coverage increases protection from losses in a number of unfortunate instances.
Comparison shopping is absolutely necessary to see a great scope of prices and insurance options. Examining several unique quotes may lead to picking effective, reliable coverage from the right auto insurance provider.