Have you recently received a cancellation letter from your car insurance company? These policies get canceled for various reasons, ranging from premium non-payment to making fraudulent claims.
Regardless of the reason, receiving such a notice leads to inconvenience because of having to shop for a new policy. The premium rates of the new policy are higher, as policyholders are viewed as risky customers, hence charged more.
The pandemic has encouraged auto insurers to provide policyholders with different methods to prevent cancellation, such as extended grace periods, different payment plans, etc.
The following guide will introduce you to the main reasons for canceled car insurance and other useful information related to this topic.
Cancellation reasons
Auto insurance policies might be canceled by insurers for a number of reasons, such as filing too many claims, getting a criminal conviction, making false declarations, committing fraud, having your license suspended, etc. For instance, policyholders who file too many claims in the course of a short period are thought of as high-risk drivers, even if the causes for the claims aren’t their fault.
Although the claims might be related to theft or bad weather, filing too many in a short time is considered suspicious activity by insurers. In such cases, most insurers decide not to renew the policies instead of canceling them. It means you will receive coverage until the policy terminates, which provides you with enough time to find another insurer.
Moreover, providing false information in the application or claim might lead to the cancellation of car insurance policies. Policyholders are obliged to disclose the required information, such as the garaging address of the vehicle, the names of the people who drive the auto regularly, any past motoring incidents or claims, etc. In order to avoid the cancellation of an insurance policy, policyholders must disclose relevant information. The failure to provide such info accurately results in immediate cancellation of the policy, as it’s considered a material misrepresentation.
In addition, drivers who often cause accidents and receive too many traffic tickets are at greater risk of having their auto insurance canceled. The same happens when the driver’s license of a policyholder gets suspended or revoked. The suspension of your license or registration isn’t supposed to occur in the course of the policy period. This rule is valid for every person listed as the driver of the vehicle. The policy might not be canceled only if the person is excluded from the policy.
Making a fraudulent claim also results in the cancellation of car insurance policies. Individuals tend to commit fraud by lying about being in an accident or about the number of miles they drive their vehicles on an annual basis. Such fraudulent behavior not only leads to canceled insurance but to a hefty fine and potential prison time.
Another reason for car insurance cancellation is driving a vehicle that’s considered unsafe. In case your auto has mechanical problems, which put public safety at risk, the policy is likely to get canceled. Additionally, if you fail to subject your vehicle to a state inspection or fail the inspection, there are sufficient grounds for insurance cancellation.
Furthermore, drivers with a medical condition that has influenced on their capacity to drive safely are likely to have their policies canceled. Some medical conditions, such as heart attacks and epilepsy, are believed to influence the ability of individuals to drive in a safe manner. Unless these individuals provide a certificate testifying to their driving abilities, they will be denied insurance. Visit this website to find out whether you can drive with epilepsy.
Individuals driving their vehicles for business purposes are likely to get their policies canceled, as the insurance fails to cover business use. Using your vehicle for the purpose of making deliveries or other work-related activities, excluding the process of commuting to work, requires a commercial policy.
Cancellation vs. non-renewal
Apart from having your insurance canceled, you could also face non-renewal, referring to the decision of the insurer not to renew the policy after it expires. The reasons for non-renewal are incredibly similar to those of cancellation, but there is a key difference in the time frame. Auto insurance cancellation usually occurs within the first sixty days of coverage, whereas non-renewal takes place at the end of the term.
As far as notice requirement is concerned, insurers send these notices at different times, depending on the cause of cancellation. Regarding non-renewal, the notice is determined by the state, usually ranging between thirty and sixty days. The reasons for cancellation generally involve non-payment, fraud, and suspension of the license. Conversely, those for non-renewal include filing too many claims, drunk driving, policy offering changes, etc.
How do you get informed about the termination?
Insurers are obliged to notify their policyholders in advance about their cancellation intentions via email. As mentioned before, the timeframe for sending these notices depends on the state and the cause of the cancellation. For instance, if your insurance is canceled due to non-payment, it usually requires a ten-day notice.
Moreover, if the cause for sending such a notice is license suspension, the timeframe ranges between twenty and forty-five days, as determined by the state. Upon receiving such a notice, policyholders are advised to deal with it at once. Sometimes, the issue can be resolved by communicating with the insurer.
If you believe your car insurance has been canceled unfairly, you can get in touch with the insurer in an attempt to resolve the problem. Nevertheless, in case the insurer isn’t interested in resolving the issue, you can communicate with the state department of insurance, which addresses the complaints filed against insurers. This department will evaluate whether the cancellation is unlawful and enforce fines upon learning so.
Can you get the insurance back?
After having your auto insurance canceled, you can get another policy, provided you pay a higher premium for it. The failure to do so leads to not only financial but legal consequences as well. For example, if you cause an accident without being insured, you will be expected to pay for the medical bills of others, as well as for the auto repairs.
Additionally, if you get caught while driving uninsured, you might face penalties, fines, even jail time. Potential consequences include suspension of your license and car, loss of your driver’s license for up to one year, jail for up to fifteen days, impoundment of your vehicle, etc.
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The bottom line
If coping with canceled auto insurance, make sure you consider all of the options so as to avoid cancellation. If possible, get it back!
