I signed up for automatic reduction from my paycheck to pay for car insurance using a service offered by my employer. The plan was set up so that my employer would subtract the money on a weekly basis and then send it to the insurance company. I was separated from the job on March 27, 2013. My employer didn't notify the insurance company that I was separated until July 12th. At which point the insurance company sent me a $2000 bill for insurance coverage of 02/2013-07/2013. According to the insurance company they were last paid Feb 2013 and did not request the weekly payments from me or my employer. My employer stated that it was my responsibility to contact the insurance company and provide updated payment information. Per the insurance company, the bill will go to collections.
There appear to be several issues here. First of all, yes, you are directly liable to the insurance company for any money that is past due. But, second of all, if your employer withheld money from your paycheck that was supposed to go to the insurance company, then the employer would be liable to you for that amount.
Andrew M. Bonderud, Esq. is an attorney with The Bonderud Law Firm, P.A. He offers free consultations 24/7. Andrew's posting here is not to be considered legal advice nor does an attorney-client relationship exist.
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I agree Mr. Bonderud and Mr. Watkins that your employer needs to account for any money withheld from your pay but not tendered to the insurance company or to whom the payment was assigned. Was the insurance policy a non-cancelable policy? If not, did the insurance company send you a notice cancellation? The papers you signed when you purchased the insurance and when you agreed to the payroll deductions should answer your question about what happens if the insurance premium is not paid.
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