Traditionally, Americans hold at least one type of insurance, either car, or home. The different types of insurance available to customers come with different features, responsibilities, and benefits.
Although there are different laws per state, majority require the insurance company to issue a notice of cancellation to a policyholder at least 30 days before effecting the cancellation. Reasons for cancellation of the policy are always specified in the policy contract.
The insurance company can only cancel a policy only for reasons stated in the insurance policy. Several states have laws that limit the number and nature of reasons that an insurance company can include in the policy to warrant cancellation. There are insurance commissions that are responsible for protecting consumers and encourage stability and competitiveness in the market.
Why do insurers cancel policies?
Several valid and legal reasons can warrant an insurance policy’s cancellation. Many of the reasons are tied to the state of residence of the policyholder.
- Inaccurate information
- Missing premium payments
- Fraudulent claims
- Several at-fault accidents
- Traffic violations
- Improper use
- Too many claims
- Severe health issues
- Company shuts down
There are instances when an insurance company cancels the policy without stating acceptable reasons; the policyholder can fight cancellation through a number of ways.
- Insufficient notice – The insurance company is required to 30-day advance notice before cancellation of the policy.
- Invalid reason – The provider must have a valid reason for canceling the policy.
- Breach of terms of the agreement – The terms and conditions specify the reasons that can lead to policy cancellation.
Stopping cancellation of your policy
Having your insurance policy may be threatening and embarrassing, but it may also present challenges to the holder when filing for future policies. In addition, policyholders may pay more in the long run as the cancellation impacts insurance credit scores. However, there are instances where a customer can negotiate to have a cancellation decision reversed. There are different reasons for cancellation of the policy, and each attracts a separate way of negotiating.