Why Would your Car Insurance Company Cancel your Policy?
It is possible for an auto insurance company to cancel a driver’s policy without obtaining permission from the driver. Some drivers believe the contract between the company and the driver will only be canceled upon the request of the driver, however this is not completely true. An auto insurer may terminate the auto policy at their discretion. The law of every state is that all drivers must hold proof of financial responsibility, or a form of auto insurance, to operate a vehicle on main roads. If a driver is found without auto insurance (or the equivalent) that driver will be held accountable and will be punished with fines, the suspension of the vehicle or license, or even prison. Each driver needs to be aware of the current status of their auto policy as often as possible.
Fortunately, an insurer cannot decide to stop providing insurance to a person without first notifying the policyholder. An auto insurance company is required to send a notice to your address they have on file at least ten days before the policy is to be canceled. This notice will inform the policyholder of the cancellation date and the reason why the insurance company is terminating the policy. This time period allows the driver to receive the notice and contact the company to resolve the issue before the policy is canceled. If the driver wants the policy canceled, simply waiting until that given date and doing nothing will automatically cancel the policy.
There are legit reasons as to why an insurer would cancel a policy. All drivers carrying auto insurance should be aware of reasons an auto insurance company may cancel their policy. Most of the reasons pertain to the driver who is insured and their actions.
An insurer can cancel a policy because of late or not paid bills. When the premium bill is disregarded and not paid, the auto insurance company will cancel the policy because they do not believe they should insure the driver when the driver is not paying for that protection. Making your premium payment on time or early will guarantee your insurer to not terminate your policy on account of late or missed payments. Any driver who struggles to make pa
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Any driver who has experienced this may easily be able to fix the problem with a phone call to the insurer and paying the bill right then.
Another valid reason an insurer can cancel a policy is due to misrepresentation or fraud. By claiming something to be true when it isn’t, the auto insurance company can void the policy. This is why it is important that when providing information to your auto insurance company, you give the honest truth. If you park your vehicle on the street but claim to park it in a locked garage, you are providing false information. When the insurance company finds out about the misrepresentation, they can cancel your policy.
All potential customers are asked to give information regarding themselves and the vehicle they wish to insure when applying for a policy. Auto insurance companies take the provided information and use it to determine the premium cost for that policy. There are certain things that cause a premium to increase or decrease. Take the example mentioned above. The person whose vehicle is parked in a locked garage will pay less for auto insurance than the person whose vehicle is parked in the street. An auto insurance company is willing to provide cheaper rates to the locked garage because that person is making an effort to keep the car safe. Auto insurance companies do not like to be lied to.
A third possibility for the cancellation of a policy by the insurer is when the driver has been deemed too dangerous to insure by the company. Any time a policy is formed or renewed, the insurance company assigns a level of risk to each driver. As the level of risk increases, so do the premium prices. (The level of risk indicates predictions made by the insurer that the driver will make a claim.) Each time a driver is involved in an accident, the level of risk increases. This is also true for receiving traffic tickets since people only receive traffic tickets when they are not obeying traffic laws. Don’t worry too much if you are involved in one accident or traffic ticket though. As long as these are very infrequent or never, you will not need to worry about the insurance company canceling your policy.
A more serious situation would involve driving under the influence, or a DUI. Participating in this act may cause serious accidents or even death, and the penalties for driving drunk are expensive. An auto insurance company may not be too forgiving about receiving even one of these offenses.
If your policy has already been canceled or not renewed by the insurance company, you will need to find another auto insurance company or contact your previous insurer to reinstate your coverage. The quicker this is done, the better. Auto insurance companies look at the length of the policy lapse and may charge more for you to have auto insurance again. Auto insurance companies are very particular about how safe and responsible a driver is, and showing a long gap between your previous policy and this new one will show them a lack of responsibility.
By the time you have new auto insurance coverage, you will be set and legal to drive again. Sometimes little mistakes, such as forgetting to pay one bill on time, are no big deal IF they rarely happen and are resolved quickly. The trouble really begins when those little mistakes occur over and over again, and it becomes apparent that you are not as responsible as once thought by the insurer.
