Car insurance cancellation rights apply to consumers and auto insurance providers very differently. They also vary by state, since each has their own way of regulating automobile insurance.
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If you are looking for a new car insurance provider and and want to cancel your policy, you need to have the facts before you make a huge mistake. The best way to cancel your car insurance is to contact a representative by telephone and ask them about the process. Most will advise that you need to submit your request in writing.
You do not need to wait until your policy is ready for renewal and depending on where you live and who issues your car insurance policy, you may be able to cancel your service immediately, as long as they receive your written notice. They will send you a final statement acknowledging your request. You should not just stop making payments, as this will result in a cancelation of your policy for non-payment.
Obtain new coverage before you notify your current auto insurance provider of your request to cancel your policy, you must never allow a lapse. In addition, once you let them know that you are cancelling, they should send you a refund no later than 60 days after the cancellation date.
The car insurance companies also have rights when it comes to cancelling your policy, however, if your policy has been in effect for 60 days or more they must show cause before ending your coverage.
If they decide to cancel your policy within 60 days, they generally do not need to provide you with any reason. Most times, these issues surround fraudulent activity, like when a consumer provides inaccurate data.
Difference between Car Insurance Cancellation and Non-Renewal
If you no longer have car insurance, make sure you understand the difference between an actual cancellation of a policy and a non-renewal, many consumers assume their policies have been canceled when in actuality it was simply not renewed. The rights are very different in each situation.
The cancellation of an auto insurance policy typically happens during different intervals of the coverage period and for a number of reasons. The most common is for non-payment and misrepresentation.
However, there are other reasons that can apply as well. They also vary by state, as in the case of someone who resides in the State of Illinois. The car insurance companies who offer policies in this state can cancel for more than 20 separate reasons so it is always a good idea to know how your state differs from others.
Because auto insurance companies must protect themselves as well as the public, they cannot and should not issue policies under certain circumstances.
If you or another person listed on your policy knowingly withholds vital information, they have the right to terminate your policy.
Non-renewal occurs when your car insurance company simply no longer wants you as a customer. This happens at the end of your term, once your policy expires. They will provide you with written notice within approximately 30 days; however, this timeframe changes from state to state. They have every right to complete this process.
They do not have to provide you with a reason, but they cannot deny your policy renewal because of your gender, age, color, race, ancestry, creed, occupation, employer, marital status, or physical impediment. This is illegal in accordance with many federal laws, like the Americans with Disabilities Act and other discriminatory laws.
If you require an explanation for their reason behind choosing not to renew your policy, you can contact them directly. They may or may not give you an in-depth explanation, but at least it will help you determine where to go for new car insurance. You can also reach out to your state insurance department for more information.
Notification of Cancellation
If your car insurance provider decides to cancel your policy, they must send you a written notice.
Depending on where you live, they may give you a 10, 15, or 20-day warning letter. In New Jersey, the requirement is 15 days.
This is called the mid-term cancellation and often happens if you stop paying your premium, lie on your application, or if suffer a license or registration suspension.
The car insurance company must give you a full explanation as to why the policy is being cancelled. Additionally, they must advise you of your eligibility to attain insurance coverage elsewhere, including any special programs offered by your state. Finally, the notice must provide you with your rights to file an appeal. Usually, this is listed under the category titled, Hearing Rights.
The notice must be easily understood, placed in an area that is fully visible and cannot contain any incomplete data, such as contact information, like an address and telephone number. An email address can be substituted for a physical address if this is the most convenient method for the insurance company who provided your policy.
Reasons for Cancellation
According to the National Association of Insurance Commissioners, some of the main reasons car insurance providers will cancel an active policy if you or someone on your policy:
- Violates the conditions or specific terms of the policy
- Fails to provide details of any accidents or traffic violations
- Were convicted for a traffic violation
- Were involved in criminal negligence
- Is addicted to narcotics or any illegal drugs
- Is charged with a hit and run
- Is charged with theft of a motor vehicle
- Has their driver’s license or registration suspended or revoked within the previous 12 months
- Has too many at-fault claims
- Has failed to provide medical documentation if heart attacks, epilepsy or any physical impediment have occurred that would place other drivers and pedestrians at risk
Your car insurance provider can use one or all of these reasons for canceling your policy. It is better to be honest during the application process and risk denial so you can keep looking. If you are not providing the information they require or are dishonest, the results will be much worse.
Right to Appeal
You have a right to appeal the car insurance company’s decision to cancel your coverage as long as your policy was not canceled due to non-payment; any other reason is grounds to request a formal hearing with your state.
This information should be located on your cancellation notice; in most situations, you must act within 20 days of receiving the paperwork. If your state has an online appeals process, this is the quickest way to file your motion.
While they will not guarantee that things will turn out in your favor, it is to your benefit to seek assistance if you are adamant about fighting the reason behind your cancellation.
You can also contact Consumer Protection Services, if you feel your policy was cancelled because of unfair treatment or discriminatory reasons. They are mainly there for you to lodge a complaint against the company you have an issue with; they cannot solve your problem.
Finding a New Car Insurance Provider after Cancellation
If your previous car insurance company cancelled your policy due to non-payment, it may be difficult for you to obtain coverage with another. This is also true if your policy is cancelled due to high-risk factors, including filing excessive claims.
If this happens, there may be programs available in your state, specifically dedicated to drivers in this category. For example, in the State of Texas, there is the Texas Automobile Insurance Plan Association (TAIPA). They may allow you to purchase levels of car insurance coverage, including PIP, basic liability, and uninsured/underinsured motorist.
The best option about TAIPA is if you continue to drive safely without any at-fault accidents or other violations, you can go to your assigned car insurance provider and request to become a standard policyholder with a lower rate; they must give you an offer in writing.
This may not apply to those with leased vehicles or people who do not own their cars because they only provide the basic level of coverage as required by the state; they do not offer comprehensive, collision, or any additional levels of coverage. Many people who lease or finance their vehicles are required to carry much higher levels above basic liability.
The Long-Lasting Effects of Car Insurance Cancellations
When a car insurance company cancels your policy, it can have a long-lasting effect, especially when you begin looking for another provider. You need to know your rights as they relate to your personal information. In other words, you have the right to privacy; you can prevent them from disclosing financial data to other companies.
Some examples include your social security number, income, payment, and credit history. They must notify you by mail if they plan to share this information and provide you with a minimum of 30 days to allow or refuse. This is why it is essential that you read your policy terms and conditions in detail.
Make sure you never discard any communication they send you to avoid making grave mistakes.
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