What Should I Do if My Car Insurance is Canceled?
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Unfortunately, many policyholders may have policies canceled by their insurers, and although this doesn't mean that they are uninsurable, it may mean having to locate a new carrier. The majority of states require that insurers follow certain procedures to legally cancel a customer's policy, which usually requires an auto insurance company to send a cancellation notice in a specified time prior to the date coverage will end; in most states, this is time period is ten to thirty days. If a consumer receives a cancellation notice, they should see if the reason is legally valid and the cause is accurate. If the notification of a policy's termination is legitimate, the motorist should seek out another provider prior to the date that coverage will be terminated.
Reasons for Policy Cancellations
In most states, auto insurance policies may be canceled by an insurer during the first 60 days for almost any reason other than discriminatory items. When a consumer purchases an automobile policy they will fill out an application, provide payment and these items will usually be sent for underwriting. During this period, the underwriter reviewing the file may find reasons to not accept the applicant and at this point the motorist will be sent a notice. Generally, this occurs when applicants fail to disclose traffic violations and/or accidents, or if the form of payment submitted with the application is not processed due to insufficient funds if paid by check, credit card, money order, etc.
After 60 days of the reasons that a car insurance company can legally cancel coverage becomes limited. One reason that a policy may be terminated is for failure to pay a premium on the date that is due. Additional reasons could include items such as obtaining policies through misrepresentation, having a driver's license revoked or suspended, or if the insured vehicle becomes unsafe to operate and may endanger public safety. If an insured has developed an addiction to narcotics, or has been convicted of criminal activities such as a felony, driving under the influence, or operating a motor vehicle that results in death, homicide, or assault, this could also lead to a legal cancellation; terminations vary by carriers and states.
What to Do After Receiving a Cancellation Notice
The first thing that a policyholder may want to if notified that auto insurance coverage will cease is to fully understand the reason why. The insured may want to contact the carrier to have the details explained and see if the reason is accurate. For instance, if a carrier is canceling a policy because of a license suspension and the insured's license was not suspended, it should be addressed to see if the coverage can avoid being canceled. If the termination is due to non-payment of premium, the motorist may want to see if a payment can be made to reinstate the policy.
Motorists that are not able to stay with their current provider will need to seek out another carrier, and usually the sooner the better. Cancellations for non-payment usually only require a 10 day notice prior to the date protection will end, which means that motorists do not have much time get re-insured. In a number of states, once policies are canceled the insurer is required to notify the state which could result in the suspension of vehicle registration. Consumers would need to react quickly to these notices and get insured prior to the termination date in order to avoid state enforced penalties.
Consumers that have experienced cancellations may want to compare car insurance quotes to find the most affordable rate since the policy termination is likely to be caused due to a negative reason, and could cause a driver's premiums to increase. By comparing the rates of various insurers, a motorist will have a better chance of regaining coverage at a price that is reasonable.