12:01 a.m. is a confusing time stamp that is frequently used in car insurance (other types of insurance too). On the surface it doesn’t appear difficult, but it does cause a lot of misunderstanding. Let’s clear up the confusion about it.
12:01 a.m. is one minute after midnight. A new day starts at midnight. So if this time shows on an insurance document as “August 22, 2019 12:01 a.m.,” it means one minute after midnight on August 22, 2019. Reading it like that, you’re probably thinking, DUH! But human nature sees the date, not the time, and misses it. Missing it can cause lapses, increased money owed to reinstate, added hassle if paperwork like No Loss Statements must be completed, or worse if an accident or incident happens after that moment in time.
Here’s why 12:01 a.m. gets tricky. You’ll see it on many insurance documents. These may include Declaration pages, cancellations, renewals and information requests as the most common.
· Cancellations: Let’s say your policy is set to cancel for non-payment August 22, 2019, 12:01 a.m. This means there is no insurance as of 12:01 a.m. on August 22nd. It’s over, done and gone one minute after midnight on the cancellation date (you do not have insurance on the cancel date). In order to prevent cancellation, you must have the payment to your insurance carrier before that time…by the 24th.
Ø In other words, you must think at least one day before the cancellation date to prevent cancellation and lapses. The last day to pay to prevent non-payment cancellation is the day before the cancel date.
· Renewals: Your policy is set to renew on August 22, 2019. It also says at 12:01 a.m. This means there is no insurance as of 12:01 a.m. on August 22nd. Your car insurance policy is over, done and gone one minute after midnight on the renewal date (you do not have insurance on the renewal date). In order to prevent expiration, you must have a payment to your insurance carrier before that time…by the 24th.
Ø In other words, you must think at least one day before the renewal date to prevent expiration and lapses. The last day to pay to prevent expiration is the day before the renewal date.
Ø Automatic payments (EFT/ACH/RCC) are a great way to not worry about the time. It puts it on the insurance company as long as you have the money available.
· Information Requests: Your policy is set to cancel on August 22, 2019 at 12:01 a.m. if the insurance company doesn’t get the information they’ve requested. Some requests can be a simple phone call, others require information in writing with signatures. This means without the requested information in-house at the carrier, you will not have insurance as of 12:01 a.m. on August 22nd. Your car insurance policy is over, done and gone one minute after midnight on the required by date (you do not have insurance on the required by date). In order to prevent cancellation, you must have the required information to your insurance carrier before that time…by the 24th. In this case, you should really think ahead and have the information to the carrier at least two days prior to give them time to process it (some companies do not have ‘real time’ systems).
Ø In other words, we strongly recommend that you think at least two days before the information requested by date to prevent cancellation and lapses. Yes, the last day to pay to prevent cancellation is the day before the date but sometimes it increases the hassle factor in this case.
It’s a great general rule to always think a day ahead when you see a date in insurance, even with payments. It helps avoid issues with cancellations and lapses. It gives you a day of cushion in case something happens to side-track you. It helps prevent late fees. If you have an SR22, it helps prevent cancellation notices going out to your state. Another time thinking a day ahead is helpful is on automatic payments. Companies can sweep in the early hours on the sweep date so it’s best to plan so that the funds are there the day before.
As a side note, you’ll often see the word “by” with the 12:01 a.m. time stamp. By does not mean on. By means before or no later than. Think back to when you were a kid and you were told to be home by dinner, it never meant after dinner had already started or been served. Or, if you had to be to school by 8 a.m. if you arrived at 8:01 a.m. you were marked tardy. Human nature, however, tends to look at the date, not the time stamp so people miss it. Save yourself some potential hassle, money and time by always think the day before when you see a date in insurance. It just makes sense.
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