R.I. Bill on Insurance Late Fees Advances

Sen. William A. Walaska (D-Dist. 30, Warwick) says he understands the vagaries of the U.S. postal system – how a letter that usually takes three days to get somewhere sometimes takes five; how a letter mailed on a weekend may not begin its journey to its destination until the next regular business day.

Insurance companies, on the other hand, seem to have a different concept of lateness, according to Walaska. For them, if a payment does not arrive at their processing office by the time the premium is due, it is considered late. They can then assess a late fee to the insured.

To help individuals avoid late fees when they really have, in good faith, sent in their premium payment on time, Walaska has introduced legislation that would prevent insurance companies from imposing a late fee unless the correspondence providing the payment is postmarked after the premium due date.

The legislation, (2005 – S0151A), was approved today (March 2) by the full Senate and will be transmitted to the House of Representatives for consideration. The bill is co-sponsored by Sen. David E. Bates (R-Dist. 9, Barrington, Bristol).

“A premium due on the 15th of the month that is postmarked and in the mail stream on the 14th should be considered paid on time,” said Senator Walaska.

“The insured has clearly not knowingly paid the bill late. The mail postmark verifies that,” said Walaska. “The date it is received should not determine lateness. If that is to be allowed, any premium due on a Saturday and not processed until the next Monday could be considered late and liable to a late fee. That’s ridiculous and simply license for the insurance company to snatch more money from its customers.”