Will there be a Penalty for Cancelation at anytime?


There was a time that I had a problem with my auto insurance company and have wanted to cancel my auto insurance with them without them being prepared for that. Recently I found out that if I did that in the past I would have gotten in so much mess. Thank God that during that time, I had to ask around and that is why I have not made a drastic move. What did make me want to change auto insurance company was because a friend of mine introduced me to his auto insurance company which he is happy about. 

As a general rule in each auto insurance company, the policy holder can cancel his or her policy provided that the policy owner gives a prior notice to the auto insurance company. Sometimes there are short rate penalty for early cancelation of the auto insurance. Short rate means that the auto company will retain more than one half of the annual premium. But there is another scenario that might happen. The auto insurance company will cancel my policy if there is a lapse in the payment I thought I have been making. When this happens I should better ask for the documentation why my policy is being cancelled. So this means, keeping every receipt or any other proofs of payments handy. 

When to cancel and auto insurance?

I forgot to read over the policies of the auto insurance company I have. It was clearly stated that I can not in any case just cancel my auto insurance because I want to. The auto insurance policy clearly stated that the only time I could cancel the auto insurance is I made a fraudulent act or that I was not able to maintain the payment of the premium pay or I was misrepresented. Another thing that I knew upon a thorough review of my auto insurance I found out that the insurance company will have the right to cancel my policy at the end of the term of my policy on any reason except the one that would be prohibited by the law. 

Knowing about these facts now helps me think twice of my decision when it comes to cancellation of auto insurance. A lesson I learned is in any case not only signing an auto insurance policy but in any other legal document, I better read well as well as understand what I am reading and ask when there is something that is not clear to avoid any confusion as well some serious problems in the future.