EFT, or the electronic fund transfer, is an automatic payment from your credit card, debit card, or banking account directly to your homeowners insurance company. The payment is taken from your card or account at the same time each month as is directly applied to the amount owed on your bill.
Its easy to set up—all you do is provide your insurance company with your routing number and accounting number from your savings or checking account. If you prefer to have the money put on your credit card, then you need to give the card number, expiration date, and the three-digit CVV code on the back of your card. The only disadvantage to using your credit card instead of your bank account is that your card has an expiration date. So, every few years (or after you are issued a replacement card), you need to provide the insurance company with the new information.
Another method of EFT is payment through an online billing system. The insurance company will have a website portal for their customers. You will have a login username and password, and can view your current and past bill statements, as well as confirmation notices when you pay. To pay through an online system, you simply log in, click on the current bill, and then follow instructions for transferring money from your bank account to the company’s account.
Aside from the ease of setting up an EFT to pay your homeowners insurance bill, your insurance company usually will offer you a discount for paying electronically. It costs them time and money to issue you a paper copy of your bill, wait for your payment, and then deposit your check in the bank. In addition, not everyone pays on time, so there is an additional risk involved in waiting for a payment by mail. With EFT, a payment is made automatically each month. The insurance companies want to provide an incentive for their customers to switch to EFT with a discount. This is usually between $3 and $10 off your monthly bill. You may also receive a 5 percent discount for choosing to have the money automatically withdrawn from your account.
It’s very convenient. EFT eliminates the hassle and worry of waiting for the bill to come in the mail each month, paying by check, paying for stamps to have it sent back to the insurance company, and then hoping it was received by the right department in time.
- If you switch banks or credit cards, be sure to notify the insurance company before making the next EFT. You don’t want your policy to be cancelled due to non-payment.
- If you switch insurance companies, make sure to cancel the EFT for your account. You need to request a cancellation, which may take several days to take effect.
- Keep money in your bank account for the next EFT. You don’t want to be caught short of funds and receive a penalty charge by both your bank and the insurance company.
- Before you start EFT, make sure to ask your agent for information about how to stop automatic payments, and your liability if a payment transfer fails or an error occurs.
- Keep a record of your confirmation receipts notifying you of a successful EFT.
Speak to your agent today about applying an EFT discount to your homeowners insurance. They will direct you to the insurance company website and help you sign up.
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