Can Insurance Companies Cancel a Policy Without Any Prior Notice?
Based on statistics, there is a continual increase in the number of Americans with an insurance policy. Although purchasing an insurance policy is a great way to protect yourself and your loved ones from disasters, certain terms and conditions are attached to the agreement. One of which is policy cancellation. It is stated that an insurance company is within the right to cancel a policy before the expiry date for reasons indicated/ stated in the agreement. However, a notice of cancellation should be given to policyholders at least 30 days before the cancellation. Nevertheless, as a policyholder, there are things you should know regarding policy cancellation. Below is a summary of everything you should know about insurance policy cancellation.
Rights of the insured
Every citizen of a country enjoys a right, and the same can be said for every policyholder. Sad but true, most policyholders fail to read the terms of the agreement thoroughly. This may be the reason why most of them are not aware of their right. Here are the rights of the insured as stated by the California Insurance Code
Right to notice of cancellation
As a policyholder, you have the right to 30 days’ notice after 60 days of coverage. However, if the coverage is above 60 days, you have the right to at least 45 days prior notice. In a case of nonpayment of premium, you are entitled to at least 10 days of prior notice. In addition, a policy cannot be canceled after 180 days of being active. Nevertheless, the notice of cancellation will not take effect unless it has been mailed to your last known address.
Right to refund of unused premium
Upon cancellation of a policy, a policyholder is entitled to a premium refund on a pro-rata basis (in proportion).
Key reasons for cancellation of an insurance policy
According to the National Association of Insurance Commissioners, an insurance company is within the right to cancel policies on certain grounds, as stated below.
If a policyholder violate the terms of agreement stated in the policy
- If the risk covered by the policy increases in comparison to when the policy was issued
- If the policy is a detriment to the financial competence of the company
- If the policy is violating insurance law
- If the policyholder fails to pay the premium too many time
- If the policyholder misinterpreted or concealed facts before purchasing the policy
- If the policyholder is deceitful when filing for a claim
These reasons are in sync with the terms of the agreement between you and your insurance company as expressed in your policy.
Ways to negotiate with your insurance company about insurance cancellation
In an event where all protocols were duly observed – the reason for cancellation is as stated in your policy and advance notice was given, there are ways to negotiate with your insurance company.
1. Review the cause of cancellation of the plan
Notice of cancellation should not be ignored. Please go through it to have an understanding of the reason for the cancellation. This will give you an insight into your next line of action.
2. Reach out to your insurer to weigh your options
It is advisable to contact your insurer to determine whether or not the notice can be clarified or reverted. In either case, you can weigh your options.
3. Take the necessary action as advised by your insurance provider
If your insurer agrees to your petition, you should take the necessary steps as advised by the company. You may pay higher rates if the cancellation is due to increased risk. You may also be asked to pay your premium up-to-date if the cancellation is due to nonpayment.
4. Non-reversal of the cancellation notice is not the end
In case your insurer refuses to agree to reverse the notice, it does not end there. Take note of the days you have until the final cancellation of your policy. The number of days left is the number of days you have coverage. Within this time, you can get in touch with other insurance companies to get coverage. The National Association of Insurance Commissioners can advise and help policyholders in such situations and try to resolve the issue with your insurance provider, helping you retain the insurance.
Finding coverage from other insurance companies may be difficult after receiving a cancellation notice. Nonetheless, at Remland Insurance, our insurance experts are always ready to help you in your difficult times. Contact us today to get the right coverage to suit your requirements at affordable prices.