I got a "free" month from State Farm

[mom2brooke76]

Ok, so it's not exactly free, but it did keep me from paying my bill for a month for my car insurance. They were emailing me a statement monthly which I would pay via my checking account. Around two months ago I finally noticed where I could sign up for billing that they automatically deducted from my checking account each month. I was going out of town when it was due and when I got back I checked to make sure that the money had been taken out of my account. It hadn't and I freaked! I called and they said that apparently you pay a little "extra" to set up a reserve in case you miss a payment one month. When they switch you over to automatic billing they use that reserve to cover that month. I had no clue about the reserve, but was super excited to see a month where I had one less bill!

 

[sherry7]

But don't they charge you an extra $2 per month service fee, when you pay it monthly?

I'm not sure if that's still the case, but that was what my agent told me a couple of years ago.

 

[RitaE]

I called and they said that apparently you pay a little "extra" to set up a reserve in case you miss a payment one month.

Car Insurance is forcing a secret escrow account?

I don't think I'd be all that thrilled if I found out. What if you never miss a month? Are they going to refund it someday?

Is this common?

 

[mom2brooke76]

But don't they charge you an extra $2 per month service fee, when you pay it monthly?

I'm not sure if that's still the case, but that was what my agent told me a couple of years ago.

They used to charge $2 extra a month when they physically mailed me statements, but aren't supposed to if they email you the bill from what I understand.

 

[mom2brooke76]

Car Insurance is forcing a secret escrow account?

I don't think I'd be all that thrilled if I found out. What if you never miss a month? Are they going to refund it someday?

Is this common?

I have no idea, but told a friend and he's going through a divorce and could use a financial "break" one month so called about it. That's what they told him too. All I know is that I'm glad that I found out that I had money that was being held aside out there.

 

[Swimalie]

Car Insurance is forcing a secret escrow account?

I don't think I'd be all that thrilled if I found out. What if you never miss a month? Are they going to refund it someday?

Is this common?

I agree. Any time you give someone access to your checking account with automatic withdrawal, you are allowing them to take extra out "by mistake" and then you have to request to get it back. It's not a good idea. More info here http://www.clarkhoward.com/news/cla...ccount-debits-not-good-paying-monthly-b/nFgX/

 

[DVC-Don]

Car Insurance is forcing a secret escrow account?

I don't think I'd be all that thrilled if I found out. What if you never miss a month? Are they going to refund it someday?

Is this common?

Not a "secret". It is disclosed for that type of billing you will have to front two months payment the first month.

 

[RitaE]

Not a "secret". It is disclosed for that type of billing you will have to front two months payment the first month.

okay - that makes more sense.

 

[mom2brooke76]

I agree. Any time you give someone access to your checking account with automatic withdrawal, you are allowing them to take extra out "by mistake" and then you have to request to get it back. It's not a good idea. More info here http://www.clarkhoward.com/news/cla...ccount-debits-not-good-paying-monthly-b/nFgX/

But I only started automatic withdrawal two months ago. They already had this reserve in place before that time.

 

[minushka72]

This is common practice with insurance policies. The contract will specify the billing plan which may be less months than the policy is actually for. My policy is a 12 month policy and I pay over 11 months. Massachusetts requires the renewal info be mailed 35-40 days prior to renewal so if I had 12 bills issued, my final bill would be due after the renewal bill issues so really I would get hit with 2 payments due at the start of the new policy year. By paying it over 11 months, the policy is paid in full before my renewal bill is mailed to me. It works this way for both regular mailing pymts and automatic withdrawal. The auto withdrawal option saves the monthly billing fee though.

 

[arthuruscg]

When i setup my Statefarm account was cheaper to pay for 6months at a time then monthly, so i have a savings account that i transfer $ into each month for the next 6months payment.
I actualy have 6months extra in that account. Since the insurance is so cheap on my 00 Taurus, if i ever replaced it, the rates would probly double.