What You Did To Get Your Auto Insurance Policy Canceled
Have you ever received a notice from your auto insurance company stating that your policy had been canceled? If you haven’t, this means you’ve handled your policy correctly since getting insured. However, this doesn’t mean that you can’t do something in the future to make your insurer unhappy.
Curious about just what you could do to convince a company so concerned with making money that it no longer wants your policy payments? Let’s take a look at what mistakes could lead you to getting your auto insurance policy canceled.
Reasons an Insurance Company Might Cancel Your Policy
Auto insurance policies are contracts between two parties who agree to specific terms. If those terms are broken, either party has the right to initiate termination.
In the case of policies, if car insurance companies feel you’re not following the terms of your contract then it’s possible your policy could end in premature termination. Here are some reasons it could happen:
- Nonpayment: One of the biggest reasons a company will cancel auto insurance coverage is nonpayment, and understandably so. Under the terms of the contract, it is your job to make your payments on time. If you don’t, the company has the right to cancel within the time frame noted in the policy.
- Misrepresentation: Another reason a company may cancel your coverage is if it realizes you’ve misrepresented yourself on your application. This could be as simple as noting that you park in a locked garage and they find out your car is actually parked on the street at night, because it’s something that would affect your car insurance rates.
- Fraudulent claim: If you decide to file an auto insurance claim under false pretenses, your insurer has the right to cancel your policy.
- Driver’s license issues: If your driver’s license gets suspended or revoked your policy will probably be canceled since you’re not supposed to be operating a vehicle during this time anyway.
- Accident/DUI: Some companies will cancel a policy if you get into too many at-fault accidents or are charged with a DUI. Being considered a danger on the roads could make you too risky to insure.
- 60-day grace period: In general, auto insurance companies are given the first 60 days of a new policy to cancel your coverage without reason. During that time, they normally review your record and determine whether you’re a good fit. If you’re not, they may let you go. Since all states have different guidelines for this type of cancellation, it’s good to contact your state insurance department for more information.
- Decision to not renew: At the end of a policy term, a company may decide not to renew your coverage if it can prove there are problems like misrepresentation, license suspensions or fraudulent claims.
Some people find that they don’t even get to the stage of having a company cancel their policy because they’ve experienced auto insurance denial. While this is rare, it usually occurs when the company finds serious issues, felony convictions, drug problems, criminal negligence while behind the wheel or some of the other issues listed above during the application process.
Is the Cancellation Ever Wrong?
While companies typically have good reasons to cancel policies, it is possible that a company could unfairly terminate coverage. For example, insurance companies generally cannot cancel coverage because of gender, race, age, creed, color, ancestry, occupation, employer, marital status or physical disability. If it is proven they have, you may be able to sue them for discrimination.
There are other state-by-state rules to govern companies so that they don’t unlawfully cancel policies. Contacting your state insurance department to familiarize yourself with these rules could help you protect yourself from undue policy termination.
What To Do If Yours Is Canceled or Isn’t Renewed
If you learn that your policy has been canceled, it’s important you determine why it was terminated. Generally, an auto insurance company is required to inform its policyholders of cancellation for nonpayment 10 days before the cancellation date. For other cancellation reasons, they may have to give you notice 20-45 days prior depending on your state. All notices should disclose cancellation reasons.
After you’ve determined why your policy was canceled, you could try the following things to get insured again:
- Call your insurer: If you want to get back with your company, you could call your insurer to see what steps are necessary to be reinstated.
- Call other companies: You could also call other companies or search for competitive auto insurance rates online.
- Look for “nonstandard auto market” insurers: If you’re having trouble getting insured by standard insurers, you could call a “nonstandard auto market” insurer that specializes in coverage for high-risk drivers.
It’s good to know that it is rare for the typical insurance company to terminate your coverage, but it’s even better to know what not to do to get your insurer’s bad side in the first place so that you could avoid having your policy canceled.