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Understanding Auto Insurance Cancellation

Auto insurance cancellation is something no one would ever wish to face; yet it does happen to drivers every day. There are certain reasons why insurers choose to cancel subscribers, and all insurers do reserve the right to cancel coverage at any time. Auto customers can also cancel their coverage voluntarily, and many do so for reasons of their own. Facing up to auto insurance cancellation and understanding the importance of moving forward when this happens to you can help you as a driver and an auto owner to minimize the damage it can have on your ability to find affordable auto coverage in the future.

Voluntary Auto Policy Cancellation

Any at-length discussion of car insurance cancellation must include at least some attention devoted to voluntary cancellation of coverage on the part of the insured driver. In the contractual relationship you have entered into with your vehicle insurance company, you have every right to choose to terminate your business relationship at any time. The same holds true of the insurance company towards you. Both parties are free to cancel coverage at any time. When you beg out of coverage for any reason prior to the expiration of the agreed-upon policy coverage date, you are really canceling coverage.

When you choose to voluntarily back out of your insurance agreement with an auto provider, you ought to be entitles to a full refund of any remaining unused premiums you may have paid. The same is true of situations in which you are canceled by the insurance company. The only exception occurs in circumstances where you have entered into a contractual agreement containing specific provisions allowing for the levying of penalties for early policy cancellation.

There are many possible reasons why an auto insurance consumer might wish to back out of a coverage agreement with a provider. One common reason is that the subscriber simply feels dissatisfied with coverage or customer service being offered by the provider, and wishes to seek new coverage from a competing company for that reason. Another common cause occurs when policy premiums are raised in the middle of a coverage period, after an accident or ticket, or sometimes for no discernible reason at all. Some consumers cancel their policies because they are moving out of state or are selling the covered vehicle and are not replacing it. Regardless of the specific reason, remember that you do have full rights to opt out of coverage, and you are under no obligation to stick with your provider.

Insurance Canceled by Provider

While that much is good news for most of us as consumers, the flip side of this statement is also true. Providers can drop you at any time as well. A cancellation can occur due to the covered policy holder violating any one of the provisions of the contractual agreement between the two parties. For example, non-payment or late payment of your policy premium can get you canceled. Drunk driving citations or other moving violations can result in you no longer qualifying for coverage under the original terms of the insurance agreement.

Any type of insurance fraud is also a virtually guaranteed way to get canceled. Insurance fraud might sound like something large and devious, but the truth is you can actually commit fraud completely by accident. For example, misrepresenting the truth in any of the information you share with your provider in your application for coverage is reason enough to get canceled. You might have accidentally given incorrect information about one of the insured vehicles or even drivers on the policy. Even a small mistake can have large consequences when it comes to your auto insurance coverage.

Auto insurance companies reserve the right to cancel their coverage agreement with a customer at any given time. Generally speaking, they do have to give you some notice when they make the decision to cancel you, but this notice is usually not very long, so you have to act quickly in response to the situation. It is critical to avoid any kind of lapse in coverage, because adding an auto insurance lapse on top of a cancellation on your coverage history will make it virtually impossible for you to get affordable coverage any time in the near future.

Do whatever it takes to be sure you have continuous coverage. Read up on the laws in your home state regarding what constitutes a lapse. Some states allow a short period between coverage to allow for disputes to be resolved, so if this kind of time is offered and you feel like you have been canceled unfairly, pursue the matter while time is still on your side. Speak to the customer affairs department of your insurance provider and see if there is any way to amicably resolve the matter. If this gets you nowhere, get a hold of your home state's department of insurance and find out what you can do to pursue the matter further. But in the meantime, do not be remiss in making sure you have auto coverage without a lapse.

Moving Forward After Being Canceled

Obviously, the prospect of being canceled does not appeal to any of us. In fact, no one really likes the idea of having to voluntarily cancel an auto policy in the middle of the coverage period. The truth is that most of us would rather leave well enough alone if at all possible. But sometimes this is simply not an option. When you cancel out on your auto insurance coverage, make sure you have another policy lined up and ready to go to avoid a lapse. And when you face cancellation from your carrier for any reason, be sure you move forward and get yourself covered before your warning period ends.

Depending on the reason why you were canceled, other insurers may not deal with you as severely as the old provider did based on the circumstances surrounding the cancellation. In some cases, new providers are more apt to forgive a single offense such as a serious injury accident or a DUI offense, in the name of reaching out to a new customer. Do not give up hope of getting into another policy if cancellation happens to you as a car insurance consumer. Make a conscious effort to move forward and do all the things you need to do to minimize the impact this unfortunate event might have on the future rates you pay for coverage.

But better yet, if there is any way you can repair the relationship you have with your provider before cancellation occurs, take advantage of the opportunity. If your provider is threatening cancellation due to continued late payments, for example, make a renewed effort to get your payments out on time. Set up an automatic payment plan deducting the funds from your checking or savings account each month. Make an effort to salvage the relationship if you can, because auto insurance cancellation is a lot to overcome in the years following this type of event in your coverage history.

Do what you can to make the best of the situation when your auto insurance coverage is canceled, or try to prevent it from happening altogether.

 

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