If an insurance company applied a payment to the wrong policy which caused the current policy to lapse, who should pay for reinstatement fees?

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If an insurance company applied a payment to the wrong policy which caused the current policy to lapse, who should pay for reinstatement fees?

The nsurance comoany applied a payment to an old non-existent policy and the current policy lapsed. They didnt acknowledge to me what had happened.I wasn’t aware of the change in agents there also because I pays online or mail in payments.when I found out that the insurance had canceled, and notice on the receipt that the payment had been applied to the wrong account. They tokd me that I woukd have to pay for the lapsed month and a month in advance to be reinstated. The company also said they would write a note to explain that it was their fault .

Asked on August 1, 2012 under Business Law, South Carolina

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

From what you have written, if the insurance company's representative applied a monthly insurance payment to a client's policy improperly resulting in a lapse of the policy erroneously, then the insurance compant and its representative should pay for the reinstatement fees for the policy, not the customer.

After all, the customer did not cause the problem.


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