Who is legally liable?

You are. You need to maintain sufficient balances to cover fixed expenses. Things like rent, utilities, insurance, etc. have to be accounted for with cash before variable expenses like food, car repairs, entertainment.

Whether or not the agent was a poor communicator is immaterial to owing the money for the premium. If you expected to be covered by the insurance, you are liable for the premium for that coverage on the date that it’s due. The fact that the money was not in the account is not the problem of the insurance company.

First of all, as far as the bank is concerned, it’s not their fault. Even if their fees are preposterous, you probably singed up for them, so there’s nothing you can do there. So somebody has to pay the bank.

From what I understand, you have already paid that money, and the question is whether you should get it from the insurance company, since it was their fault. In this case, it’s a dead end, because it’s not as if it’s just the agent’s money, where he might pay it as a sign of good will. He won’t cover it, and neither will his company. The only thing you can really do is take them to court for it, and then prove that it was all their fault, and hope that they’ll be forced to pay the court expenses as well as the bank costs.

It doesn’t sound like a strong case though, because they’ll always just pretend they did everything right and gave you the information on time. Or the agent will say he didn’t notice the fax, or something like that. It’s a bit hard to prove all that, if they keep denying it (which they will). You’re not even accusing them of overcharging you, you’re accusing them of bad communication which resulted in you being charged by another company (the bank). This sounds like more trouble for you than it’s worth it.

Big companies often do that, knowing that the average individual has better things to do than run to court for $10 or even $100. They can make millions that way, because it’s not worth your time to demand your money back, and sometimes you might not even notice. So unless this is a matter of principle for you and you’re doing it for the moral satisfaction, the money itself is not worth the hassle.

Write the insurance agent a letter, detailing everything you said above. Include copies of any correspondence, as well as the names of everyone at the insurance agency you spoke to. Detail the charges from the bank, and include a copy of your bank statement or some other documentation. In the letter, state that per your conversation with the agent, you expect to be reimbursed for the costs incurred to you due to their mistake. Even if you don’t have a lawyer, state that you intend to discuss the situation with an attorney if you aren’t reimbursed within the month.

It might not work, especially since actually getting a lawyer involved would probably cost more than you could get back from the insurance agent. Or, it might make the agent nervous enough to pay you back just to avoid any trouble. Is there someone higher up than him you can contact? Send copies of the letter to the agent and his boss.

If you’re lucky, they might reimburse you. If not, you’ll just have to chalk it up to a life lesson. You might want to consider stopping the automatic payments to avoid having this happen again. I pay most of our bills online, but do it manually. No surprises that way.

If I were you, I’d write a letter to the insurance agent detailing the problem. And then I’d shop around for a different insurance agent, and turn off any automatic bill paying that you aren’t in complete control of.

I, too, would find an agent I could communicate with better. I also recommend that as soon as you can you get your bank to set you up with overdraft protection when they will allow it. Also, until you have more money in the bank, stop automatic payments.

Getting a lawyer involved would be counterproductive and would cost more than it would be worth. You could draft a letter such as the one being suggested above. If you do I suggest you send it to the agent certified and return receipt, so you can prove (if you ever have to) that it was received.

You might also consider changing banks once your finances have recovered.

If your agent has agreed to pay the fees he should pay the fees regardless of how much they are, did he tell you he would cover them on the phone or was it in an email?

What insurance company are you with that is screwing up things like this?

I’m not a legal expert, but try this. Some people have had success, other not. I think in your case, it is less likely to work, but give it a shot anyway.

Keep in mind that unless the company records phone calls, the ‘he said’ stuff may be easily thrown back in your face. Look for your records of the fax not going through or print your machine’s fax history as well as your phone records. Locate any copies of correspondence.

You might consider using email as your main correspondence for this reason, or at least have them send email confirmations about important things like this. You can scan documents and email them instead of faxing, and request confirmation that it has been received.

I would also recommend you adjust how you pay bills to prevent this in the future. Here’s a couple thoughts:

1) Every time my husband gets paid (twice a month) I put money to cover half our monthly bills in a separate account, and pay everything on the first of the month. Because it is in its own account, we can’t accidentally spend the money meant for bills (the card for the account is locked up and only gets taken out at the first of the month) and we know it’ll be there.

2) If you are responsible enough, get a credit card, and use it for bills only (though don’t go over 20% or so of your max limit, for credit score reasons (exactly why, I don’t know)). Put away money for those bills, and use that to pay the credit card at the end of every month. That way, if this stuff happens, you still have your money. You can dispute things easier too. The biggest danger about credit cards is that sometimes people slip up and can’t pay it off at the end of the month. I’ve never had a credit card (though I am getting around to getting one to build my credit), so someone more familiar in the area might want to comment and make sure this sounds alright.

Checking your bank accounts daily is a good thing. Balance your checkbooks when you eat breakfast before you go to work or something. I’ve heard good things about about www.mint.com, but I have yet to use it myself.

I don’t think it was a good idea to set up automatic billing if you’re not going to make sure the money is there. Especially if money is tight, automatic billing is a bad idea. I hate automatic payments. Just pay online. If you have to have automatic payments, the credit card way may be better, kind of like a back-up plan if anything screws up (I think you’ll still be charged interest if you don’t have the money to pay it off at the end of the month, but that’s better than having no money at all).

Often, big banks aren’t forgiving with fees. If you’ve had an account there for a long time, and have a good history (you deposit your paycheck there, you’ve never/rarely been negative before, you have a healthy average account balance) you might be able to talk with someone there about having the fees forgiven. Assume its a one-time thing; it isn’t good to ask them to remove fees all the time. They won’t like it and may put a note on your account to prevent fees from being removed. But because this is such a strange situation, you may be able to work it out with your bank (but try this only after you’ve done what you can with the insurance company). If they refuse to remove all the fees, then be understanding, but you can still ask to have just some of them removed. This will work best with a smaller bank. Do not attempt this mad, and it might be a good idea to bring your wife.

Sadly, banks will bend over backwards for customers who have a lot of money (you know, the ones who don’t need breaks) and ignore those who don’t (losing their money isn’t usually considered that big of a deal). I’ve always hated seeing that in banks I worked at.

Good luck!

Unfortunately, this type of error takes forever to fix. The best thing you can do is limp along with the best fix you can arrange, until the final outcome.

@MissAusten has the best suggestion, write it all down and submit multiple copies to everyone involved, then keep sending duplicate copies and e-mails and phone calls until the insurance company pays for their mistake. It will see like it takes forever, but be persistent.

Thank you all for your answers. They are all great. Also, thank you for the links to the different sites, I have checked all off them out.

My wife and I do all of our finances through Quickbooks, running our financing like a business. So far, it has worked great. I am an accounting student, so it helps in a few ways. Every morning, I check everything and reconcile appropriately. Needless to say, I found the withdrawal immediately.

Unfortunately, I thought the end result would require me to cough up the money and cover it all. Also, LEGALLY, I figured it would be my responsibility to cover. However, the situation was certainly an interesting one. I thank you all again for your answers and input.

UPDATE: In the end. Regardless of fault, my bank stepped up to the plate and solved the problem. The bank actually is Wells Fargo. I spoke with a few people at our local corporate office and they said the following:

- The insurance company needed to pay/step up and follow through with what they said they would cover.

They took care of all the late fees. Thank you Wells Fargo.

The insurance company? Erie Insurance.

I will be switching this month (insurance companies) and not enrolling in the “automatic withdrawal” option. I never was very comfortable with that anyway.

@scotielee YAY, not enough good things can be said for keeping close watch on your own finances. Hubby is our CFO and he does a great job