The vast majority of Americans have some kind of insurance on their vehicles, homes, and even themselves. Consumers can choose from a variety of insurance options, each with a unique set of features, advantages, and responsibilities.
In the majority of states, an insurance company is required to give the policyholder written notice of cancellation at least 30 days before the policy is canceled.
The terms of the policy contract outline the reasons upon which the insurer may revoke the coverage, as well as the policy that must be followed. Being in risk of losing your insurance can be frightening and expensive, but there are ways to contact and bargain with your insurance company should this happen.
The insured’s legal rights
Except for the reasons expressly stated in the policy, an insurance company cannot cancel an issued insurance policy. State laws typically place restrictions on what an insurance company may cite as justification for canceling a policy. All insurance policies should be read carefully, and if you have any questions, ask your insurance agent to help you out. According to an Insurance.com survey conducted in 2018, almost one-fourth of homeowners surveyed admitted they did not read their policies, which could expose them to future issues.
Each state has an insurance commission or division tasked with upholding consumer consumers while promoting a sound and competitive insurance market. Insurance companies’ financial stability and ability to pay claims are verified by state insurance regulators. Additionally, they work to ensure sure that insurance companies honor their policies to policyholders and insureds by handling claims in a timely and accurate manner and by treating policyholders and insureds fairly. The National Association of Insurance Commissioners (NAIC) is a great source and provides information on the offices of each state commission.
POINTS TO NOTE
- Consumers can choose from a variety of insurance policies, and each one may have a unique cancellation clause.
- A 30-day notice of cancellation to the policyholder prior to the cancellation date is typically required by states for insurance companies.
- State insurance commissions are set up to honor customers, ensure that insurance companies are financially stable, and make good on their commitments to handle claims payments.
- A cancellation may be avoided through negotiation with the insurance provider.
Motives for Cancellation
The reasons of a policy, including cancellation provisions, are contained in the policy contracts. Among the frequent reasons are:
- Intentional damage caused to a covered asset by the insured, the policyholder, or a stakeholder
- felony convictions
- “Moral risk” is posed by insured.
- Life changes
- far too many payments are late
- A surplus of claims
- Significant risk changes
- Negotiation Techniques
Calling your insurance provider is worthwhile if you want to try and stop the cancellation by offering a satisfactory resolution to the issues raised by the company. Make sure the data in your file is accurate and current first. Review the issue and suggest a few potential solutions. Ask if you can eliminate water damage coverage from your policy moving forward, or inquire if they have another policy that does not cover water damage, for instance, if your homeowner’s insurance is being cancelled due to an excessive number of claims for water damage.
If you fail to adhere to the obligations of the policy agreement, the insurance company has the right to revoke your policy. To keep your insurance, you can try to negotiate with your insurance company and use resources like the NAIC, which can provide policyholders with free advice and services.