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Why Auto Insurance Companies Cancel Policies?

Why Auto Insurance Companies Cancel Policies Blog

Under normal circumstances, an auto insurance company can choose to cancel its policy with you at any point in time for any given reason. However, no good insurance company terminates its policy with a client without sound reasons. Here are a few. You wake up on a lovely morning. You’re having a nice hot cup of coffee and going through your mail and bam! There it is a notification from your insurance agency of the cancellation of your policy. What could’ve gone wrong? Why would your insurance agency suddenly cancel your policy? Well, your auto insurance agency can opt to discontinue your policy due to some reasons. One of the first things you need to do is go through the notification carefully and determine if you received a non-renewal or cancellation notice. Regardless of what information you received, below are a few possible reasons why your insurer might choose to withdraw their services.

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Violating your Auto Insurance Policy Terms

This is one of the easiest ways of having your insurance agency revoke or annul your policy. During the process of taking out your insurance, you would have had to sign, and as such, be subjected to certain terms and conditions of use for the underwritten property (your car). If you violate any of those terms, your insurer may rightfully choose to cancel your policy outright or issue you a non-renewal notice (DNR). A classic example of violating the duration of your policy would be using a vehicle you had insured for personal use for your business. When using a car for business, it is usually protected under a different kind of policy.

Incidence of Fraud or Dishonesty

This is a very serious affair and can have some serious legal repercussions. As such, while taking out a new auto insurance policy, the importance of being as detailed and as truthful as you can be cannot be overemphasized. You stand to lose a lot otherwise. Should you take out a policy without informing your insurer of certain details, it could lead to more than just losing your policy. The insurance agency could use those grounds to deny your settlement, even when you have a valid claim. So do your best not to leave anything out. Ensure your insurer is clear on details like your mileage, who drives what in the house, and so on. It’ll go a long way in preventing misunderstandings with your insurer.

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Non-payment/Failure to Make Payments on your Auto Insurance Policy

Non-payment of your premium is perhaps one of the biggest reasons why most insurance companies cancel their policy with insured individuals. Have you been making prompt and timely payment on your policy when due? If you haven’t, it just might be the reason you received the DNR. Making regular payments on your premium is how an insurer can effectively cover you in case of an accident. Failure to do this serves as a breach of the agreement between you. This is a sufficient reason for most insurers to terminate any policy.

In addition to the above, variables such as the current living conditions of the state you’re in, losing your driver’s license, and making excessive insurance claims can lead to losing your policy with an insurance company. The moment you receive the notification, do your best to get in touch with your insurance agency to see if it can be fixed. If it cannot, what you need to do next is to start shopping for another insurance company as you cannot move freely without taking a policy.

Nick Lai
the authorNick Lai
Founder & CEO of NickMetrics Group

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