4 Common Reasons a Car Insurance Company May Drop Your Coverage

Car insurers can cancel your coverage if you do not qualify the guidelines for eligibility, you are determined as high risk, you are implicated with fraud or misrepresentation, or you have a history of serious traffic violations.

Even though car insurance must follow state policies, a provider may still cancel the coverage of a policyholder for a reason that does not involve violating state laws. Auto Insurance Leads might go over these reasons when evaluating clients to be included in their listings. You may have difficulty finding a new auto insurer if your current company drops you. It is good to be aware of the things that could cause your auto insurance to be dropped so you can avoid this from happening to you.

You do not qualify the guidelines for eligibility

Insurance providers typically set aside 60 days to see whether a potential customer is eligible for insurance under their rules and regulations. The insurer can reject your claim if he finds that you have made unfavorable claims in the past, have a record of numerous traffic violations, or if their specified conditions are not fulfilled. Similarly, you could also be rejected if you are unable to provide the necessary documentation and requirements like a proof of your previous insurance coverage. If the company drops your application, they will usually send you a notice in advance.

You are considered to be high risk

It is standard for insurance companies to weigh the risks and benefits of insuring a client. The insurance company may drop you if you had a history of many traffic accidents and your insurance premiums were insufficient to cover the expenses involved. Insurance companies prefer insuring low-risk customers and clients who pay their premiums promptly. Felony convictions and a bad credit record will not be favorable for you and will only cause you to be assessed as high risk and make it possible for your policy to be dropped. Although there are insurance groups that specialize in providing insurance for high-risk drivers, their policies are usually very expensive.

You were engaged in fraud or misrepresentation

If you were engaged in fraud or misrepresentation, your insurer could cancel your coverage if they are legally allowed. In addition to losing your coverage, you may face criminal charges. Lying or misrepresenting information can also be grounds for cancellation of your coverage. It is possible for this to occur even after the stipulated time limit of 60 days has passed.

You have a record of major driving violations

Cases like driving under the influence or reckless driving can cause insurance companies to terminate policies of their clients. This is applicable if your driving license ended up getting suspended due to these violations. Driving violations will be eventually be discovered by insurance companies as they periodically examine their customers’ motor vehicle reports.

Despite the fact that there are many reasons that an insurance company can drop your coverage, you should keep in mind that you do have a number of driver’s rights protected by law. In cases where you feel that your driver's rights were disregarded or that you were refused insurance coverage on unreasonable grounds, you may consult and file a report with insurance regulators.