HOUSEHOLDS struggling to pay insurance bills due to the coronavirus crisis are to be given until October to ask for a payment break, the watchdog has said.
The Financial Conduct Authority (FCA) plans for firms to continue to offer the temporary help until October 31 this year, following a brief consultation period.
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This will allow industry insiders to offer their views on the plans, while making sure that the watchdog is able to act quickly to help households.
The extension will apply to all types of insurance cover, including car, home, pet and travel policies.
Back in May, the regulator told insurers they should offer vulnerable customers up to three month repayment breaks.
It also advised firms to look at reducing premiums where a payment holiday isn’t appropriate, and offering partial refunds of unused policies to help minimise the stress on bill payers during lockdown.
Providers should consider waiving fees associated with changing policy cover as well.
Ultimately, it’s up to the insurer to decide what help is granted but it should talk through its reasoning with customers.
Until an extension to the offer of help is confirmed, customers have until August 18 to ask for a payment holiday.
The FCA has already extended similar help available to customers on mortgage payment holidays, as well as prolonging a ban on home repossessions until the autumn.
The watchdog emphasised it is important customers do not leave themselves uninsured, and that their insurance cover meets their demands and needs.
Customers who are struggling due to the economic impact of the Covid-19 outbreak are advised to contact their provider to discuss their options.
The FCA wants to hear feedback by 5pm on Tuesday July 28.
Its draft guidance does not prevent firms from taking their own extra measures to support customers.
In the meantime, insurers should continue to offer the recommended help to bill payers.
Normally, taking a payment holiday would negatively impact your credit score but freezes taken due to the coronavirus pandemic won’t.
But the watchdog warns that lenders may still be able to see that you’ve taken a break on payments through other sources, such as your bank account information.
MoneySavingExpert revealed how taking a payment holiday may stop you from getting a mortgage in the future.