What is the grace period
What is the grace period?
“The insurance policy has expired and I haven’t renewed it yet, but I’ve heard that
I have a grace period. What is it and how long does it last? And if I have an accident during this period, who pays?”
Your broker response:
This is a period of time during which the policy guarantees are effective, even if the receipt has not been collected.
It is very important that you know the grace period of your insurance.
Our legislation provides for a period of thirty days to prevent the insured person from being deprived of guarantees due to a delay in the payment of the premium.
Most likely, you will receive a notification after the due date prior to the final cancellation.
But what about the Consortium? We cannot forget the extraordinary risks that are covered by the Insurance Compensation Consortium,
because in order for it to pay the indemnity, the insured person must be aware of the payment of the receipt of the insurance policy premium,
in which there is a surcharge in favor of the Consortium, which is expressly detailed in the receipt.
Our recommendation: always settle the insurance receipts in time and form, this way you will avoid possible inconveniences.
Grace period in broad sense
The grace period (in a broad sense) is a preferential period for crediting, in which interest is not charged for the use of funds.
In the bond market, the grace period is the period following the occurrence of a technical default, within which the issuer is required to pay the lease amount, exercise a call option,
or repay the principal amount of the security. If the issuer manages to fulfill its obligations it does not occur.
However, if the issuer has not been able to make the payment before the grace period has expired, a default occurs.
During the grace period, investors and creditors cannot file claims to initiate bankruptcy proceedings.
The grace period is expressed in days following the issuer’s technical default; it is indicated in the issuance documents,
but can also be fixed by law (for example, no later than 10 days, unless another period is indicated in the issuance prospectus).
Information on debt service, and the length of the grace period can be found on the single bond page in the “Debt Service” section.
An example of a security for which a technical default has occurred but has not defaulted, as the issuer was able to pay off the debt during the grace period