What Causes Cancellation of Auto Insurance Policies?

Automobile owners are required to have certain amount of insurance throughout the USA. If someone is found to be driving without insurance he/she may face heavy fines and/or imprisonment depending on driver history and the state. That is why it is important to make sure your policy remains active at all times. Also, it may be harder and more expensive to buy coverage should your policy be canceled by your vehicle insurer.

   Car Insurance Cancellation

Once you have had a policy issued you are protect from perils listed within the policy terms. It is unlikely that a policyholder would need to deal with auto insurance termination except for certain situations stated within the policy conditions. When insurers cancel car insurance policies it isn’t because they are being unreliable. It is usually due to discovery of considerable risks outweighing any benefits of keeping the policyholder.

In most states the insurance industry is rigorously controlled. Legal reasons for a car insurance termination are obviously outlined and one or two of them are uniform from state to state. Policies are issued for a stipulated period of time which is usually 6 months. However, companies may feel that they cannot wait until renewal to drop certain policyholders.

However, terms of vehicle insurance cancellation are clearly defined in typical policy terms and conditions. Usually, car insurers will prefer not to drop a policy in effect if they can help it. At the end of the term the insurance firm can choose not to continue the policy for other reasons that aren’t specifically outline. Carriers normally give notice to policyholders if their coverage will not be renewed.

Usual notice period for cancellation of car insurance policies is 10 – 30 days. Any violation of the policy contract is enough for dropping a policyholder but there are three cases that are typical.

   Failing to pay the premium: The first and most common reason for car insurance policy termination is failing to pay premiums in full and on time. There is not a lot of room to negotiate with the insurance firm if you have habitually missed payments.  If you suspect you are not able to make your payment on time, contact them immediately.

Technically, you are not covered if the premium isn’t received by the payment date unless the policy offers a grace period openly for premium settlements. Quite a few companies offer time to pay ranging from couple of weeks to thirty days. Also, these periods may be enforced by state regulators on every policy issued within.

   Suspension or revocation of driver license: The second reason for termination of automobile insurance coverage is the suspension or revocation of your driver license for various reasons, such as multiple DUIs or DWIs and reckless driving. If your license is suspended you are breaking the law by continuing to drive. So, the insurance company will not cover your losses in case of a car accident. And if you are caught driving without a valid driver license many firms will cancel your policy. You can only get car insurance with no license under very special conditions and it isn’t usually for facilitating an unlicensed driver.

   False information or omissions of facts: Another cause of auto insurance cancellation is providing false information or omissions of facts when requested by the carrier. Motorists may manage to get a lower quote by keeping some facts to themselves. But they can suffer considerably if they get found out especially after a claim. In minor incidents you may be asked to pay additional premiums to cover the avoided amount. When the attempt is deliberate and material like hiding the fact that you have a DUI, the policy can be terminated and claims are refused.

There is no need to be concerned about termination of auto insurance if you drive carefully and are truthful with all of your information. Being truthful with your provider is always the best choice. The company wants to keep you insured and keep getting premium payments.

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