Unraveling the Reasons Behind Insurance Policy Cancellations
The financial protection and peace of mind that come with having an insurance policy will be taken away if the policy gets cancelled. If you know the reasons for cancellation of an insurance policy, it will help you so that you do not end up in an unfortunate position. Below is an instruction that describes a task, paired with an input that provides further context. Write a response that appropriately completes the request. Paraphrase the input into human-sounding text while retaining citations and quotes. Almost all insurers reserve the right to cancel their policy if needed. It is a well-known fact that many existing insurance policies get cancelled by insurers. In this article, we are going to look at the reasons for cancellation of the insurance policies, offered by the insurance companies, that many people face to prevent it from happening to them.Non-Payment of Premiums: Failure to pay your insurance premiums is one of the most common reasons for policy cancellation. Because insurance is an annual contract, missing the renewal term payments will result in the insurer canceling your policy. Premiums are the key to keeping your coverage active and avoiding policies that may lapse.
Misrepresentation of Information: When applying for insurance, you are required to provide full disclosure of information and to answer questions truthfully. If you later discover that you misrepresented vital facts or provided inaccurate information while obtaining your policy, the insurance company has the right to cancel it. Above all, as an insured, treat your insurance company and their representatives with respect and openness.
Rising Risk Portfolio: Every so often an insurer will go through its portfolio of policyholders and see who it thinks has become a higher risk. If this is your policy and your risk has increased – perhaps through increased traffic violations, accidents or claims – the result could be cancellation or additional premiums that reflect the increase in risk.
Dodgy activities: Fraudulent activity such as faking an event by having an accident, exaggerating a loss or submitting a fraudulent claim is a punishable offence and has the most serious consequence – the cancellation of your policy. Insurance fraud incurs fines and punishment from the law.
Failure to Follow Policy Terms and Conditions: Basically, if you buy insurance, you agree to do certain things, as noted in the terms and conditions of your insurance policy. These might be things such as installing security systems to qualify for homeowner’s insurance, or not driving more miles than what your car insurance policy allows.
Underwriting changes: Some insurers review their underwriting guidelines and drop lines or cancel coverage for some types of policies or in some geographic areas. Your policy might ‘fit’ into a cancelled category and your insurer could cancel your policy at renewal.
There is nothing worse than insurance cancellation, you are at risk and exposed and a net financial cost to you when it happens. How to stop this? Timely renewal premium payment, accurate information for the application process, and a low risk profile. Be honest in application, comply with conditions, and do not indulge in fraud practices (From Wikipedia). Knowledge over reasons for policy cancellation gives you the ability to start taking preventative action to prevent cover cancellation and ensure your peace of mind.
