Insurance Policy Cancellations

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Insurance Articles by A-1 Auto Insurance

Insurance Policy Cancellations

Perhaps you have just purchased a new vehicle using the tax refunds you recently received. You are very happy with your new car and you have purchased auto insurance coverage. You think everything is fine. However, you may subsequently be advised by your insurance provider that your insurance policy will become ineffective in a certain number of days; the notification period will vary in each state. You need to find out why your insurance policy will be expiring, as it may mean the difference between a minor hassle and a huge financial loss if you are ever involved in a motor vehicle accident without insurance coverage.

Change in Insurance Coverage Terms

If you are fortunate, your insurance coverage will still be offered at an affordable rate, and your insurance provider will allow you to renew your existing auto insurance policy for the same price. However, you may discover that this is not the case. Some insurance companies will enable you to renew a current auto insurance policy, but they will specific terms that are different. Insurance companies must provide written notification of any change in terms 60 to 90 days before the expiration of your current insurance policy. However, if the rate is lower than 25 to 30 percent, insurance companies may not have to notify policy holders, according to state law.

Why You May Cancel Your Insurance Coverage

Even worse, your current insurer may decide to drop you as a client. This is not a personal affront. Non-renewals are often caused when insurance companies decide to discontinue doing business in a particular area or stop selling a specific type of insurance. Filing insurance claims, amassing more license points or failing to pay your insurance premiums are other reasons why an insurance provider may choose to cancel your insurance policy. If you fail to report a crime or you cause a particularly severe accident, your insurance policy may be canceled. This applies even if you happen to live in a no fault auto insurance state.

The good news is that insurance providers are required to warn you well in advance of your current policy’s expiration date, and they must provide just cause for no longer covering you. In addition, you are entitled to receive reimbursement for any insurance coverage or services that are not rendered.

Additional Factors to Consider

You should be aware that some insurance companies consider merely calling to ask about an insurance company policy as a claim. Therefore, try to keep your calls anonymous if you have to contact your insurer. Another important consideration is the fact that certain insurance companies do not allow a grace period for renewing your auto insurance policy. Therefore, if you fail to pay the full amount by the specified deadline, you may end up being dropped by your insurance provider.

Lying On Your Insurance Application

It is important to note that there is a big difference between making a mistake when you completed your insurance application and deliberately withholding relevant information or including false or inaccurate details. Insurance providers who discover that you did not fill out your insurance application honestly have the right to terminate your current insurance policy. This can leave you with no insurance coverage. Your insurance company will still be required to pay you back for the remainder of your insurance policy that you have already purchased. However, you may find it very difficult to locate an insurance company that is willing to sell you auto insurance coverage.

What to Do If Your Insurance Policy Is Cancelled

If you receive notice that your current auto insurance policy is being cancelled, you should immediately begin looking for another insurer. You need to find new auto insurance coverage before your current policy expires, and the process may take a while. The notice required for insurance policy cancellations is not as long as the notice period required for non-renewal of existing insurance coverage. The state laws in many areas require insurance companies to provide insurance coverage to every driver. Therefore, as a last resort, you may be able to purchase high risk auto insurance at a more expensive rate.

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