Insurance Companies are Restricted As to How They Can Terminate Your Coverage

A Insurance Article Contributed by Brandie King

Introduction to Insurance Company Restrictions Regarding Coverage Termination

A cancellation of your insurance policy is when your policy is terminated before its expiration date. A non renewal of your insurance policy is when your policy is terminated upon its expiration date. Your insurance company is required to notify you before it terminates your insurance and is also required to refund unused premiums to you. You have the right to request them to give you a written explanation of why they are terminating your insurance, whether it's being canceled or non renewed.

They absolutely cannot cancel or non renew your insurance with them based on discrimination, such as your sex, religion, age, or ethnicity.

Insurance Company Termination Restrictions - Homeowners Insurance

As long as they do it within 90 days of the effective of your policy, your insurance company has every right to cancel your policy for pretty much any reason they choose as long as discrimination is not involved. After 90 days your insurance company can only cancel your insurance for very specific reasons and must give you at least 10 days notice. The reason that they can cancel your insurance policy include you not paying your premiums, fraud, or an increased risk at your property.

If your insurance company decides to non renew your policy they have to give you 30 days notice in advance before the policy expiration date. Reasons your insurance company can non renew your policy with them include deterioration of your property or having too many claims in the past three years. If those claims are related to the weather then your insurance company can't use them as a reason for non renewing.

However, if those claims are related to events such as fire, theft, broken water pipes, and other events not related to the weather then your insurance company can use them as a basis for non renewal.

Insurance Company Termination Restrictions - Auto Insurance

Auto insurance policies are eligible to be canceled by your insurance company in the first 60 days as long as the reason for cancellation has absolutely nothing to do with discrimination. Your insurance company is required to not only give you 10 days notice before the policy cancels, but to also pay for any damages covered by your auto insurance policy.

After 60 days your insurance company can only cancel if you do not pay your premiums, get your drivers license taken away from you, or make a claim on your policy that is fraudulent. Your insurance company can't non renew your insurance policy unless you have had it with them for at least 12 months, and even then must give you 30 days advance notice and let you know why your policy is non renewing.

Insurance companies cannot either cancel or non renew your policy due to a single not at fault accident within a period of one year or because of other not at fault claims (Ex: hail damage, flying gravel, hitting an animal).