How do you Pay Insurance Premiums for your Owners Corporation when Funds are Low?

Information from Resolute Property Protect

We understand that many Australian’s are currently facing uncertain times, and potentially a loss of income due to the COVID-19 pandemic. Given this current climate, Owners Corporation may be concerned about their ability to pay insurance renewals. This is where Premium Funding comes in.

Premium Funding payment solutions allow Owners Corporations to pay their insurance renewals over a period, to help ease the burden of financial stress.

What is Premium Funding?

Pay insurance premiums by the month.

Premium Funding Programs are a flexible financial solution designed to enable Owners Corporations to spread the cost of their insurance premium over equal monthly instalments of up to 10 months.

Removing the financial burden of a lump sum insurance payment can help to free up cash flow, so individuals and families can utilise money which would otherwise have been spent on insurance, on essential items and immediate needs.

The benefits of Premium Funding

Owners Corporation Insurance is an absolute necessity; however, the cost of insurance doesn’t need to restrict cash flow or cause unnecessary angst for the Owners Corporation.

Premium Funding payment solutions can be extremely beneficial for several reasons:

  1. Affordability. Premium Funding allows Owners Corporation insurance cover to be more affordable.
  2. Low cost. A low-cost financing option with competitive fixed interest rates.
  3. Tax Deductible. The OC may be able to claim a deduction on interest expenses; however, we recommend they obtain advice from an accountant for confirmation of what applies to their individual circumstances.
  4. No Guarantor Required. It doesn’t require personal guarantees.

How does it work?

Your insurance broker will guide you through the simple process of arranging Premium Funding. Below we have provided a brief explanation on how it works:

  • Premium Funding providers offer flexible payment arrangements that evenly split the total premium due into a maximum of 10 monthly instalments. The number of instalments selected is dependent on the Owners Corporation needs.
  • Once the payment plan has been finalised and approved, the premium funder will pay the entire premium due directly to the nominated insurer.
  • Going forward, the premium funder will deduct the agreed monthly payments from the OC, in accordance with the terms of the contract.

The application process is far simpler than a bank loan and requires fewer background checks and credit reports.

It’s also good to know that upon renewal of the strata insurance each year, existing Premium Funding contracts can easily be rolled over, minimising the need for your clients to complete additional applications.

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