Valid Reasons Why Your Insurer Cancels Your Insurance Policy


Your auto insurance coverage will cover the cost in case of car accidents. You expect your insurer to pay for it; after all, what’s the use of religiously paying for your monthly premiums if you can’t use it in times of despair? But what if you discovered that the policy has been canceled? On top of that, how can you prevent this thing from happening?

We don’t want you to see in this situation, so in this article, we’re going to discuss few points how to avert this potentially catastrophic situation.

Lying To Your Insurer. Whether you are deliberately lying to your insurer or not, chances are, if discovered, they can cancel your policy right away. Are you bending the truth in your mileage consumption? Or did you forget telling your insurer that you’ve installed a new component in the vehicle? If you are using your car for business purposes but the original contract is for personal use only, well, that’s another ground for ditching you off. If you think about it, these are just small and excusable peccadillos, but your insurer might see them differently.

Insurance companies provide their insurance quotes based on your risk level. If the risk level increases without them knowing, you could lose your policy just that. Imagine reporting a mileage consumption of 6,000 miles a year, but the actual reading is at 20,000 miles. The more you spend time on the road, the higher the risk of getting into an accident, and subsequently, into filing of insurance claims.  The insurance company will have two options here in dealing with your case. They either will adjust your rates to reflect the actual mileage or cancel the policy right away.

Loss of Driving Privileges. If our state has disallowed you to drive, your insurer will cancel your policy. In the first place, if you don’t drive, there’s no point in extending you any forms of coverage. Furthermore, they will investigate the reason behind the revocation of driving privileges, because this could be a signal that you are being a reckless and high-risk driver.

Many policyholders attempt to cover the truth when their driver’s licenses are suspended. But this method rarely works because an insurance company does make regular counterchecks to see if their policyholders are not being charged for such. DUIs, suspensions and similar stuff will show on your record, so hiding them is good-for-nothing.

Late Payment or Nonpayment of Premiums. Insurance companies are not charitable institutions, so you need to pay your insurance dues on time. If you are in a habit of delaying payments, your insurer may cancel your policy in no time. Most insurers offer a grace period; some only a few days, while the others don’t have any at all. Settle your account right away to avoid the coverage canceled.

This usually happens to people switching insurance companies, to say, take advantage of much lower rates and benefits. Nonpayment doesn’t always mean old accounts automatically classified as invalid. Keep your policies healthy by not letting your insurer to just cancel them. You will have a difficult time finding another insurer should this happen. This will negatively affect your profile as it is usually interpreted as a high-risk business between you and the new insurer. You can still be classified as a high-risk driver, even if your driving records are smudge-free.