premium payment after claim

[sperts]

What is the name of your state? MI. I have a friend who has a fire ins. claim being processed and the commercial property was a total loss. His ins. co. says he needs to continue paying his $600 a month premium or they will stop paperwork on his claim? Is this normal procedure? He is suffering income loss from losing his property and having a tough time paying this premium. and is concerned the ins. co. could drag the paperwork on indefinitely. can they? thank you in advance.

[las365]

I do not know enough about insurance coverage to know whether, if your friend cancels his policy during the policy period and without paying the entire premium for the policy period, the carrier could legitimately claim that there was no coverage for a covered loss that occured prior to the cancelation. One wouldn't necessarily think so, but most commercial insurance policies are for a coverage year and there is a premium amount that is for that entire year. It is basically as a courtesy (and a practical business decision, as many insureds can't afford to pay for the whole year in advance) to accept monthly premium payments.

Your friend could contact Michigan's state department of insurance to try to get the answer to the question of whether the carrier could deny coverage for something that has already happened if he stops paying now. In any event, he should get the insurance company to put their statement regarding this in writing so he can prove that they made it, if he needs to. In the meantme, he should scrape together the money to pay, because it wouldn't be worth it to lose the policy benefits to save $600/mo. If he needs to sue them later, he can.