FOR EXISTING POLICY
FOR NEW POLICY
The grace period in insurance is a feature that helps policyholders keep their policy active for an extended time past the due date of the premium.
Business insurance or any other insurance does not work on the “buy once and forget” mantra. If you want to enjoy the coverage, you need to make timely payments of the agreed premium amount.
But what happens if you fail to pay the premiums before the due date? Will your policy become inactive? The answer is no, provided you have a business insurance grace period offered by your insurer.
The grace period is basically the last chance the insurance provider gives to keep your policy alive even when you fail to pay the premium on time. But how long is this grace period? How does it work? We will discuss all these answers in the blog.
Keep reading!
What is the Grace period in Business Insurance?
Business insurance grace period refers to a defined period during which a policyholder can make the premium payment without their policy being lapsed or cancelled.
Depending on the type of insurance policy and terms and conditions of an insurance provider, the grace period can be anywhere around 24 hours to 30 days. The exact information on the grace period can be found in the policy documents.
How Does the Business Insurance Grace Period Work?
Let us understand the working of business or SME insurance grace period with the help of an example.
Suppose the due date of your business insurance policy is 1st September, and you fail to pay your premium due to some reason without even realising it.
On 5th September, a massive fire broke out at your insured workplace.
If your policy did not have a grace period, your insurance provider will consider it lapsed on 2nd September and will not cover the fire damage. However, if you have a grace period that is extended till 5th September, your policy will cover all the damage caused by the fire.
This is how important it is to have a grace period in business insurance.
What If You Fail to Pay the Policy Premium Within the Grace Period?
If you pay your premium amount in the course of the offered grace period, then your policy will stay active, and you will not have to face any penalty to reinstate your business insurance policy.
However, if you fail to pay your premium even during the given grace period, your insurer may cancel your policy or charge a hefty penalty for keeping it active.
Final Thoughts
The grace period plays a crucial role in SME insurance. It provides you with some extra time to pay your premiums without facing penalties or getting your policy cancelled.
We have discussed everything about the business insurance grace period and how it works. We hope it helps!
