Maryland’s General Assembly has passed a bill this month that would allow the Maryland Automobile Insurance Fund (MAIF) to offer installment payment option for policyholders.
MAIF, the insurer of last resort, was created by the Maryland State Legislature in 1972 for the purpose of providing auto liability insurance for those Maryland residents who are unable to obtain it elsewhere in the private insurance market.
MAIF said Maryland Gov. Martin O’Malley is expected to sign Senate Bill 930 into law, allowing MAIF for the first time in its 40 history to accept installment payments for insurance premiums.
“This legislation is a victory for all Marylanders. Those who need MAIF policies will now have a more convenient and less expensive option for purchasing their policies, making the choice to drive insured an easier one. Those who are insured by other carriers will ultimately find themselves on safer roads in our state, alongside fewer uninsured vehicles,” said MAIF Executive Director M. Kent Krabbe.
Previously, MAIF policyholders were required, by statute, to pay their entire premium at the time of purchase. A MAIF customer who was not able to afford the full premium payment was required to finance the policy through one of Maryland’s approved premium finance companies, subjecting the policyholder to additional fees and interest rates.
According to the fiscal note for SB 930, prepared by the Department of Legislative Services, MAIF’s installment plan will save policyholders between $200 and $400 per year.
Over the last eight years, this bill has been proposed and debated in several iterations. In 2013, MAIF said, the political landscape and the level of consumer advocacy awareness aligned, allowing sponsors and supporters to get SB930 through committee, passed by both houses of the General Assembly, and on to the governor for signature.
This law is expected to take effect on July 1, 2013.
Under the bill, for policies with an annual premium under $3,000, policyholders are required to make an initial payment of 25 percent at the time of purchase, and are then able to pay the remaining premium in up to six payments, over the course of the yearlong policy.
For policies with an annual premium of $3,000 or more, policyholders are required to make an initial payment of 20 percent at the time of purchase, and are then able to pay the remaining premium in up to eight payments, over the course of the yearlong policy.
MAIF will not charge interest rates on installment plans. However, it may charge a small administrative fee of up to $8 per installment payment.
“We thank all of the sponsors of Senate Bill 930. In particular, we would like to thank Senate Finance Committee Chairman, Sen. Thomas “Mac” Middleton of Charles County and Senator Catherine Pugh of Baltimore City for their leadership and support of this bill as well as their advocacy for Maryland drivers in need of a more affordable alternative for their insurance premiums. We would also like to thank Gov. O’Malley for his steadfast and constant support for this important reform,” said Krabbe.
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