At times, automobile insurers have no option other than cancelling the coverage. People shouldn’t worry about this happening to them because they wouldn’t want to give up on premiums easily. They are known to increase rates and impose conditions but usually they are not keen to end it. Perhaps not in an alarming rate but terminations happen and motorists get caught unprepared. This post will discuss various scenarios and the position you would be in at that time and ways of handling the situation.
Probably first thing vehicle owners would be thinking is how to get covered again. It is best to start with studying the events surrounding vehicle insurance cancellations. Then, we can see the problems we have to face to know what to do next. It can just be a nuisance or a huge trouble depending on the cause.
When Can Auto Insurance Companies Cancel Policies?
Here are a few reasons why you may have to deal with such a situation. In any case, it is worth knowing the circumstances that can force companies to take such an action and considering options after the policy is dropped.
1. Non Payment of Premium
It is probably the most common reason that forces them to take action. You cannot expect carriers to give away the policy. You will have to pay at some point and it is better be sooner rather than later. Some companies can be really quick to react after missing an instalment. Some of them would give around two weeks grace period but you should not count on that. They may still dispute a claim submitted in that period. Unless they have explicitly mentioned in the documents that they will offer certain grace period, technically you broke the contract by not making the payments.
When this happens, first thing you would do is to contact them and find out if they would reinstate it. They may if you are prepared to settle the outstanding amount and not just the missed one. Most of them would insist on receiving the full premium before they reinstate because they don’t want to deal with the same problems again at the next instalment.
If you are having no luck with them you should be quick to re-insure your vehicle for several reasons. First of all, you now have no coverage and you cannot drive it since the consequences would be severe. And, DMV will most likely be informed that the liability car insurance is dropped. Furthermore, there is a chance that the non premium payment will show on credit reports and others won’t like it. So, you shouldn’t allow the coverage lapse much longer and make alternative arrangements. Usually, a lapse less than a month may not be visible or ignored. Otherwise, you could create a small hill to climb, as it would be harder and more expensive to find an alternative policy.
2. Automobile Insurance Frauds
Giving false information so that you can get cheap quotes or get paid for a claim you should not have been is a fraud. Knowingly providing false information for financial gains is deception. Not only you can get policy termination but may face criminal charges as well. They are known to be tough on these cases. One of the reasons is that they wouldn’t want a dishonest policyholder. However, the main reason for canceling coverage and pressing charges against the fraudster is to discourage others trying the same.
It is fair to say that there is no getting back with them once they take action due to fraudulent activities. Actually, you would pray that they don’t press charges against you. So, again try to get coverage from somewhere else as quickly as possible before anything appears on your record. Generally, carriers cannot penalize drivers if they don’t see anything on the records. So, use the small window of opportunity well.
3. Driving Licence Suspensions or Revocations
If you lose the license you don’t have the privilege to operate an auto and therefore the coverage should be canceled. It is possible that you can persuade them to keep protecting the vehicle for theft, fire and weather related damages as long as you agree to take it off the road. If one of the listed drivers lose a license or get suspended that person should be removed or never allowed to get back behind the steering wheel.
4. Major Traffic Moving Violation Tickets
You can see why this would be a problem. A driving under the influence of alcohol or drugs conviction is a good one and many companies would cancel auto insurance after a DUI. They may do the same when several moving violation tickets appear on the record suddenly. They simply like to get ahead of the claims.
When this happens, it is hard to avoid huge premium increases for several years. Unfortunately, everyone would know about the convictions the moment they go on record with DMV. Rates will go up wherever you turn to. Then onwards, you would be considered as a perilous driver and have to try and get affordable high-risk quotes. This is one of those situations you cannot expect mercy because you proved to be reckless.
5. Impairments and Major Health Issues
In some cases, coverage may be dropped if a person is diagnosed with a certain medical condition that makes it unsafe to operate a vehicle. In Illinois, for example, insurers can cancel a policy if a driver is diagnosed with epilepsy and his or her doctor doesn’t provide proof that the condition will not impair.
It is probably already clear that you cannot carry on or keep the license. What happens to your insurance depends on what you want to do with the vehicle. If you are selling it you probably don’t need it any more. You can probably protect it for fire and theft if you convince them that you won’t take it on the roads. Also, you may be able to buy insurance without drivers license in such circumstances if you can find a primary driver to add to your policy. If you cannot do it anymore perhaps someone else can use it or chauffeur you around. In that case, you may be able to buy another or reinstate the original policy with new terms and conditions.
As discussed above, it may be a big problem or just an inconvenience but your car insurance gets cancelled mostly due to something you have done or happened to you. They don’t just throw a fit and start dropping policyholders like flies. First thing you should do is to find out why and if it can be reinstated with the same company. Don’t waste any time and find another solution if you cannot carry on with them. Last thing you want is to get caught without it or face accident damages on your own.