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How Does Insurance premium Work?


In simple terms, Insurance premium financing is a loan that an individual or a company takes from a financing company. The amount paid is to an insurance company to keep the companies or individual’s policy active. The funds will deposit to the insurance company’s account, and the financing company bills you monthly or yearly, depending on your agreements. In the article below, I have discussed How Insurance Premium Financing works, aiming to enlighten you if you consider engaging in the practice.  

Requirements for premium financing 

To answer the question, How Does Insurance Premium Financing Work?  It starts with addressing the requirements for one to engage in the activity. There are many premium financing companies globally, and the condition might vary from one company to another. Generally, the company will require you to provide them with identity verification documents, tax compliance certificates, other lenders’ clearance certificates (proof that they can trust you to repay the insurance loan), evidence of assets, and particular net worth. They will then use these documents to decide on whether to grant you the loan and finance your premium insurance or not. 

Assessing risks and loan crediting 

Insurance financing companies do consider various risks before granting an applicant the loan. These risks include but are certainly not limited to: 

  • Defaulting-You may not be able to repay the loan within the agreed conditions. Therefore, you risk losing not only losing the premium financing but also losing your assets. Financing companies, therefore, consider this risk before granting you the loan. 
  • Loan rating- You may have defaulted in paying other loans elsewhere and think that it will never haunt you. You’re mistaken. Insurance premium financing companies require a specific rating from a person before granting them their wish. So first, clear defaulted loans before visiting insurance financing companies for loans. 
  • How Does Insurance Premium Financing Work with collateral risk? With most financing institutions, deaths are 100% collateralized. However, the value of assets given by the requester must satisfy collateral. Calculating the importance of these assets may vary from company to company and may be influenced by different economic conditions. 
  • Other risks- There are many other risks involved, such as settlement risk and credit spread risk. 

Once finance institutions are satisfied with these risks, they will credit the loan to finance your premium insurance. 

Repayment of the loan 

So now you are lucky that your insurance premium financing is successful, don’t celebrate for too long. Have a plan and make arrangements to repay the loan within the agreed framework and concerning the agreed terms and conditions. You should avoid defaulting at all costs since it will lead you to lose the finance, and the financing company will confiscate your assets. One last thing, you won’t make payments to the insurance premium company but to the company that financed your insurance, the lender. So now you have an answer to the question How Does Insurance Premium Financing Work, and you can feel safe to start initiating the process at your discretion. 


Financing your premium insurance can be good, especially if you don’t have the resources for a one-time payment to the insurance company. However, before venturing into it, consider carefully going through the above article to be enlightened and think if you are ready for it. 

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Why A Great Lawyer Can Save You Money

When You Need a Car Accident Lawyer

Car accidents are frequent, and you will need a car accident lawyer if you incur any losses that require compensation after an accident.  The person will help you to get compensation for medical expenses, car repair, and lost wages.  In cases of reckless driving or driving under the influence, an accident lawyer can help to find compensation for the death of a loved one.

The right time to hiring a car accident lawyer

Establishing negligence by another driver as the cause of an accident is the starting point to get compensation.  Sometimes it can be challenging to identify negligence. Investigation to establish negligence might become necessary if drivers contest liability after a car accident. You should hire an accident attorney soon after a motor vehicle accident. The law allows victims of an accident to recover financial compensation for severe injuries and damage to the cars and other property. The payment can only take place if the claimant that the cause of an accident was legal negligence by someone else.

Always hire an accident lawyer shortly after an accident helps to avoid costly mistakes that might diminish the credibility of a claim and might affect chances of compensation. Starting negotiations with an insurance company, the lawyer or another driver or anybody else might cause you to admit fault involuntarily.  Insurance companies also need to make profits hence train their adjusters to make the claims look illegitimate or minimize the payout. 

A car accident lawyer also helps you to file claims for personal injury within the deadline even when you are incapacitated.

What should you look for in a car accident lawyer?

The duties of auto accident lawyers cover a wide range of issues that stem from personal injury, property destruction, wrongful death, and determination if liability. It is essential to focus on these aspects when searching for a good lawyer to deal with your auto accident claim.

  • Skill level
  • Commitment
  • Experience
  • Convenience of location
  • Service fee

 Different states have differences in the AJC claims law. An attorney handling such cases should be knowledgeable about the transportation laws in the state where an accident occurred and also those that guide national transportation. These laws form a basis of preparing as well as settling a case with the health care and insurance companies. It is also essential to determine the background, track record, and references of a lawyer before any engagement with a lawyer. You need to work with someone who has been winning cases and is likely to get compensation for you or show that you were not liable for an accident.

 A good accident lawyer will accept on a contingency (no win no fee) basis. Such lawyers take up cases that they feel have merit as winning is the only way to earn.

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