Can they really cancel my policy without asking?
Your insurance company can cancel your policy, but they must provide written notice before doing so. the amount of time they have to give you varies by state. If you have questions about policy cancellations, it’s a good idea to check with your state insurance department.
Unlike a non-renewal, which only occurs at the end of the policy term, cancellations can occur at any time. Non-renewals can happen for many reasons, which can include too many traffic violations, a change in your credit, and filing too many claims. But car insurance cancellations can usually only happen for a few reasons.
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Why do companies cancel policies?
In general, insurance companies can cancel your policy for any reason during the first 60 days of the policy. however, they do not normally cancel policies for no reason. Usually, it’s because the risk she presents to the insurer has changed since she applied.
Common reasons policies are canceled
Laws vary by state, but if your policy has been in force for more than 60 days, there are generally only a few reasons why an insurer can cancel your policy mid-term. may include:
- You didn’t pay your bill. Insurance is no different than any other service you pay for. if you don’t pay your bill, it will be cancelled. Most insurance companies offer a grace period, usually 30 days, after the payment is due. If you update your payments during the grace period, the insurance company will generally keep your policy active.
- You lied. This also includes lies by default. If you weren’t (completely) truthful when you filled out your application or filed a claim, your insurance may be cancelled.
- Your license was suspended or revoked. States can suspend and revoke licenses for various reasons. examples include driving under the influence of alcohol or drugs, having too many points, and unpaid parking tickets. If the state suspends or revokes your license, your insurer generally has the right to cancel your policy.
- Your health status has changed. If you have been diagnosed with a medical condition that makes it unsafe for you to drive, the insurer may cancel your policy.
- fines if caught driving without insurance
- higher premiums when you get coverage again
- suspension of your vehicle registration
- repossession of your car if you are leasing it or have an auto loan
- pay on time. if you know you won’t be able to make your payment, contact your insurance company right away. they may be willing to work with you to set up a payment plan so you can keep your coverage active.
- Tell the truth. Don’t try to hide things from the insurance company to get a lower rate or make it look like you were not at fault for a claim.
- Follow the rules. Don’t give your state a reason to suspend or revoke your license. reckless driving and driving under the influence of drugs or alcohol are not the only offenses that can lead to your license being suspended. Your state could also suspend or revoke your license for failure to appear in court, failure to pay fines, leaving the scene of an accident, and more.
what to do if your policy is cancelled
The first thing you should do after receiving an auto insurance cancellation notice is to contact your insurance company. depending on the circumstances, they may be willing to reconsider. if they don’t, you should start looking for new coverage right away.
You can start your search with traditional insurers. But if you can’t find coverage, you may need to check with companies that specialize in insuring high-risk drivers. And if you still can’t get insurance, you may need to check with your state’s assigned risk insurance group. Insurers participating in these groups must accept drivers assigned to them by the state, regardless of the risk they present.
Regardless of where you get insurance, you don’t want to let your policy lapse because it could leave you exposed to financial loss if you’re in an accident. additionally, it triggers a chain reaction of events that may include:
how to be reinstated
If your insurance company cancels your policy for non-payment, you may be able to get it reinstated. It’s usually easier to reinstate the policy if it’s within the grace period and hasn’t expired yet. if your policy has expired, it will be more difficult. but the rules for reinstatement vary by insurer, so it may be worth calling your insurance company.
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If you received an auto insurance cancellation notice because you didn’t pay your premium, contact your insurer right away. they may be willing to reinstate your policy if you pay what you owe, plus accrued interest and fees.
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If the insurance company agrees to reinstate your policy, you may need to sign a form saying you did not experience any losses during the grace period. and you agree not to file any claims with the insurance company for incidents that occurred during that time. Having the insurance company reinstate your policy is usually the best option because you maintain continuous coverage and you don’t have to shop around for a new policy. your insurer can still raise your rates.
how to avoid cancellation of your policy
There are things you can do to help avoid auto insurance cancellation.
If you receive a car insurance cancellation notice from your insurer, find out if you can reinstate your current policy. otherwise, you’ll need to find new coverage quickly so your policy doesn’t lapse.
This story was originally published on kbb.com.