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Charlotte Amalie
Monday, August 8, 2022
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Government: Auto Insurers Must Give Customers a Break

Though few people know it, V.I. law provides that drivers can pay for their compulsory vehicle insurance in two semi-annual payments, without having to borrow money to do it.

A Source reader, responding to a recent article about the number of drivers who flout the compulsory insurance law, raised the issue of the semi-annual payment. She charged that insurance providers were reluctant to tell customers they have the option and, instead, push those who can’t afford to pay the full amount at one time to take out short-term, high interest loans.

But the compulsory insurance law actually provides that customers may pay half the premium at the start of a policy and the other half six months later. It does not state that companies have to advertise the option, but it says that insurance providers that fail to allow semi-annual payments could be subject to suspension of their license for up to 90 days.

Glendina Matthew, assistant director of the Division of Banking and Insurance, confirmed, “That law does exist.” She said her office had received a complaint last year that a provider was failing to offer the option. “We addressed it with the agency,” she said, which agreed to abide by the law.

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“We have not issued penalties,” she said, but noted the office will soon be sending out “a bulletin” to all insurance providers in the territory stating that they are obligated by law to offer the option of semi-annual payments.

John Harper, president of the Virgin Islands Insurance Association, said the option is “rarely requested” by customers and administratively difficult to provide.

Agents in the territory don’t actually provide coverage but work with companies that do. Typically the agent has 30 to 45 days to pay the company in full for an annual policy, Harper said. So if a customer pays only half the amount of an annual premium at the start of a policy, the agent will either have to put up the rest of the cost or rework its agreement with the insurance company to allow for the semi-annual payments.

If customers exercise the option on a widespread basis, it may also exacerbate a problem that insurance providers say is already significant.

Last month Raymond Fournier, president of Guardian Insurance – which provides the lion’s share of vehicle insurance in the territory – said that many drivers renege on their auto insurance loans once they register their vehicles, thus forcing cancelation of their insurance. Fournier cited that trend as a major reason why he believes 20 to 30 percent of drivers on territory roads do not have the liability insurance required by the compulsory insurance law.

Fournier did not return calls seeking comment for this article.

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Though few people know it, V.I. law provides that drivers can pay for their compulsory vehicle insurance in two semi-annual payments, without having to borrow money to do it.

A Source reader, responding to a recent article about the number of drivers who flout the compulsory insurance law, raised the issue of the semi-annual payment. She charged that insurance providers were reluctant to tell customers they have the option and, instead, push those who can’t afford to pay the full amount at one time to take out short-term, high interest loans.

But the compulsory insurance law actually provides that customers may pay half the premium at the start of a policy and the other half six months later. It does not state that companies have to advertise the option, but it says that insurance providers that fail to allow semi-annual payments could be subject to suspension of their license for up to 90 days.

Glendina Matthew, assistant director of the Division of Banking and Insurance, confirmed, “That law does exist.” She said her office had received a complaint last year that a provider was failing to offer the option. “We addressed it with the agency,” she said, which agreed to abide by the law.

“We have not issued penalties,” she said, but noted the office will soon be sending out “a bulletin” to all insurance providers in the territory stating that they are obligated by law to offer the option of semi-annual payments.

John Harper, president of the Virgin Islands Insurance Association, said the option is “rarely requested” by customers and administratively difficult to provide.

Agents in the territory don’t actually provide coverage but work with companies that do. Typically the agent has 30 to 45 days to pay the company in full for an annual policy, Harper said. So if a customer pays only half the amount of an annual premium at the start of a policy, the agent will either have to put up the rest of the cost or rework its agreement with the insurance company to allow for the semi-annual payments.

If customers exercise the option on a widespread basis, it may also exacerbate a problem that insurance providers say is already significant.

Last month Raymond Fournier, president of Guardian Insurance – which provides the lion’s share of vehicle insurance in the territory – said that many drivers renege on their auto insurance loans once they register their vehicles, thus forcing cancelation of their insurance. Fournier cited that trend as a major reason why he believes 20 to 30 percent of drivers on territory roads do not have the liability insurance required by the compulsory insurance law.

Fournier did not return calls seeking comment for this article.