Shared from our friends at Economical Insurance company (Stephanie Fereiro )
Insurance policies can be cancelled for a variety of reasons, either by the customer or their insurer, depending on the circumstances. If you’re wondering why your policy may have been cancelled or how you can prevent a policy cancellation, take a look at the top three reasons why an insurance company might need to cancel your coverage:
- You didn’t pay your premium. Non-payment is, by far, the most common reason insurance companies cancel policies. Similar to any other utility bill, missing payments could result in a cancellation.
- You’re no longer eligible for coverage under your existing policy. Sometimes these cancellations are within your control, and sometimes they’re not. If there’s been a change in your situation and your current policy can no longer provide the coverage you need — or if you no longer meet your insurance company’s eligibility criteria — your policy could be cancelled.
For example, if you rack up too many traffic tickets, you may find that you’re no longer eligible for coverage under your existing car insurance policy — or that your current insurer can no longer cover you at all. In this case, your insurance broker would help you find coverage from a company that can insure drivers in your situation.
On the other hand, if your Calgary home insurance broker is only able to cover homes worth $2 million or less, but inflation bumps your home’s value up to $2.5 million (a situation beyond your control), your insurer can no longer provide you with the coverage you need, so they’ll likely have to cancel your policy.
- You didn’t tell your insurance company about a material change. In the insurance world, a “material change in risk” is any change in your circumstances that could impact your eligibility for coverage or alter the type of coverage you need. In other words, it changes the nature of the risk your insurer is taking on by providing you with coverage. A material change could be anything from changing your home’s heating system to signing up for a vehicle sharing program. If you fail to report a material change to your insurer, your policy could be cancelled.
What happens after your policy is cancelled?
For starters, a policy cancellation could result in a lapse of coverage, meaning you won’t have insurance until you find a new provider. If your home insurance is cancelled, it could also affect your mortgage, since insurance is often a condition of financing. A cancellation of car insurance would affect your driving, since it’s illegal to drive without car insurance. Any type of insurance cancellation could also lead to trouble when you’re shopping for a new insurance provider, and you may find yourself paying more for your next policy.
To prevent a policy cancellation and avoid trouble down the road, always:
- Be honest on your application and upfront at renewal time
- Pay your premium on time
- Inform your broker about any changes to your circumstances as soon as they come up
If you have any questions or need to make a change to your coverage, reach out to your licensed broker. If you’ve been through a policy cancellation and need some guidance on your next insurance purchase, call us at Action Insurance group to get some clarity.
Tags: Calgary home insurance