According to the law, you must have auto insurance in order to legally drive on the road. So, why and when would your auto insurance company cancel your coverage? What can you do in this situation? Here is some information for you.
If you have received your cancellation notice, you will find enclosed inside, the reason why they are canceling your coverage. They don’t cancel their client’s coverage without a good reason; after all they are in the business of making money.
Generally, there are three reasons why they may have canceled your auto insurance coverage. The main reason being bills, have you payed them?
An auto insurance provider is just like any other company; they are not going to provide you with a service, such as insurance, for free. They understand that without insurance you won’t have a way to get back and forth, but they have to consider their bottom line. Although it is a legal requirement that you have insurance in order to drive, it is not a legal requirement that they be the ones to give you the auto insurance.
Auto insurance companies will generally give you a month to catch up on your payments. If they are not payed after that, they will more than likely cancel your auto insurance policy. They need to make money after all and cannot afford to pay for their clients claims if they do not have money coming in to do so.
Another reason they may have cut off your auto insurance policy is they may think they are being lied too or defrauded. Auto insurance companies have zero tolerance for this kind of thing and will cut you off in they find out this is the case.
What could you have been lying about? Well, when you signed up with your auto insurance provider, they asked you a lot of questions to determine your risk factors, so they could determine your auto insurance policy price.
If you lied about any of these factors to lower your policy premium amount, then you scammed them out of their true cost for the service they provided you. They could even take you to court to recover this lost income. So, if they are only cutting off your auto insurance upon finding out you lied to them, count yourself lucky. However, you will find it difficult to get auto insurance coverage from any other provider once it is known that you lied to your previous.
The third reason they may have cut off your auto insurance coverage is the risk factor you present to them. Auto insurance companies like to insure safe drivers so that they do not have to pay out a lot of claims, thus making themselves a lot more money.
If you signed up with low risk factors and received a low rate, then why are you being cut off? Well, some time has passed since you first signed up, and maybe you have gotten into a lot of accidents, or have filed a lot of claims and now you are no longer a low risk customer. You have actually become high enough risk that they no longer want to just raise your prices, but they want to drop you as a customer altogether.
There are other reasons an auto insurance provider will drop a client, but those are rare. More than likely when you open your cancellation notice you will find that the reason is one of these three.