Post Date March 15, 2012 - Auto Insurance Companies never cancel a customer’s car insurance policy for no apparent reason. Widespread stories of individuals having their auto insurance policy cancelled for no apparent reason adds to the distrust many have for auto insurance companies in general. The truth of the matter is, although you may disagree with the reason a car insurance company cancelled your policy, it’s never for no reason and all policy cancellations guidelines are mandated by the Department of Insurance in the state you live in.
The truth is; repeated at fault accidents and traffic violations, evidence if heaving drinks or DUI or false statements on an application for car insurance are among the top reasons for policy cancellations in the 21st century. By far the number one reason for car insurance policy cancellation in non-payment of premium. Many customers just wait to long to mail or make their payment online after the policy has expired. Every insurance company regardless the type of coverage must provide you with a grace-period after the payment is due. In many cases, again this depends on the state, an insurance carrier will provide you as much as 18 days after the due date to submit the premium payment due. Some insurance companies will now allow you to reinstate your policy after the cancellation when you submit the payment. Of course, you will not be covered for any claims which occur during the short cancellation. Example: say you policy cancelled on the 1st of March, you call our office and make the payment on the 14th. Although your policy is now in force, if you hit a deer on the 1oth – we will not pay for the damage to your car. On the other hand, If you hit a Deer on the 20th, that claim will be covered.
Another reason for a policy cancellation you may feel is not fair is, the financial fitness of your agent. Low Cost Auto Insurance Rate agents like InsureDirect.com are expected to maintain a profitable agency or what we call a “Book of Business”. What is a Book of Business? Simply put – it’s you. The term goes back to the days of Benjamin Franklin when he started the first insurance company in 1752. An insurance agent would maintain a journal or Book containing a written list of all the customers. Each page of the book represents a customer and the premiums he or she has paid the agent. The agent is responsible for sending those funds to the insurance carrier. The book would also outline the agents profit and loss. The agent must collect more policy premium than is out paid in claims costs. If an agent fails to do this, the agent’s relationship with that car insurance carrier is terminated. Any policy maintained by that agent will be non-renewed and the customer will need to find alternative insurance coverage.
Michael E. Dortch
President & Managing Agent
Corporate Home Office
618 South Broad Street
Lansdale, Pennsylvania 19446
(800) 807-0762 ext. 602