Why Would Your Insurance Company Cancel Your Policy?
Got a cancellation letter in the mail and do not know what to do next? This blog post will go into detail about the common reasons why insurance companies cancel clients’ policies and it will outline the steps that you can take to move forward.
The Cancellation Letter
If your insurance policy is cancelled, you will receive a cancellation letter from the insurance company between 45 to 60 days before the cancellation is put into effect. This gives you time to find a new insurance company to get a new insurance policy
This is the most common reason why insurance companies cancel insurance policies. Missing payments on your insurance premium will not be tolerated by insurance companies, which is why you need to keep on top of your payments. Some companies may let you pay the premium for the whole year, which may be a good idea if you want to be sure that you will not miss a payment.
2. Material Change in Risk
A material change in risk is any change that you make to your car, home, and/or
business that alters the risk that is insured by the insurance company. For example, if you originally lived in your home and had a regular home insurance policy, but then decided to rent your home to a tenant, this would be considered as a material change in risk. This is because a new coverage, landlord insurance, would be required to cover the home. As a result, if the insurance company is not notified of this material change in risk, they may cancel your policy.
3. Eligibility for Coverage
Insurance companies have certain criteria that an individual being insured must meet. If their situation changes making them ineligible to meet the criteria anymore, the company may cancel the policy. For example, a driver, insured with a standard insurance company, can have their car insurance policy cancelled if they receive multiple driving convictions, such as speeding tickets, making them a high risk driver. This is because high risk drivers are not insured by standard insurance companies. Conversely, a high risk driver can have their policy cancelled or non-renewed, if their driving record improves because they don’t fit the criteria for the company to insure them anymore. The driver would have to go back to a standard insurance company for a new car insurance policy.
What to Do After Receiving a Cancellation Letter
It is important to get a new insurance policy before your coverage lapses, especially for your car insurance. Car insurance is required by law to drive, so don’t let your coverage lapse. Talk to your insurance broker as soon as possible, so they can help you find another insurance company that can give you a new policy. Depending on the reason for the cancellation, and the length of time which you didn’t have insurance, it’s possible that your cost of insurance will increase! Thus, it is important to stay up-to-date with your insurance payments and keep your insurance broker notified of any changes to your car, home, and/or business.
Receiving a cancellation on your insurance policy is the last thing you want to have to deal with. That is why you need to keep up with your insurance payments and make sure that you keep your insurance broker informed of any changes to your insured car, home, and/or business. If you have any questions about a cancellation or are looking for an insurance quote, you can always call us at 905-886-7277 to speak to one of our licensed brokers.