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Complaint 12 of 15 in "Billing or Pricing Issues"

Insurance Carrier: Gmac Insurance
State: Mississippi

Consumer Complaint:

Called GMAC on 10/27/08 to cancel motorcycle insurance effective 11/16/08. GMAC motorcycle policy with GMAC and now have to pay a "short rate penalty" as we cancelled mid policy. Pulled all my paperwork regarding insurance on the motorcycle (I am very detailed and have policy information when we started this three years ago) and never once got information on this penalty. Also pulled my policy from our previous motorcycle with GMAC and it does not state this information. GMAC rep last night said they do not give this out to Customers (short rate penalty information) with their packet of a new or renewal policy.

Insurance Expert Answer:

As companies quote yearly rates, not monthly rates, and bear the issue expenses (including sales commissions, processing, license updates, etc) expenses up front they historically charge more for a policy in effect for half a year than half the annual premium. So while what they are seeking to do is standard industry practice, unless they have given policyholders some notice I'd be hard pressed to see how they can impose the charges as a legal matter. I know they'd claim it is in their rate filing with the state, but is that sufficient notice to you? Off hand, I'd be skeptical.