When Can A Car Insurance Company Cancel Your Policy

You hear stories all of the time about car insurance companies refusing to pay your claim. The question people ask is, does your car insurance company have the right to do that? If it does, then what are the situations that it can cancel your policy?

The Principle of Utmost Good Faith is what makes it possible. What is it? Basically it says that each party, meaning you and the insurance company, must be honest with each other. Meaning you have to answer all of the questions they ask you honestly.

If you lie then they have the right to cancel your insurance. This can be bad for you and also for the people you got into the car crash with.

So with that information, you now know that the insurance company has the right to cancel the policy from the date it started. Here are some major reasons why insurance companies may do that:

  1. Fraud. If you purchase car insurance with the goal of tricking the insurance company then the insurance company has the right to cancel the policy. For instance, if you have an already wrecked car that you buy insurance for in the hopes of filing a claim on it, then you are committing fraud. In cases like this, the insurance company may also call the police.
  2. Misrepresentation. Lying about your gender, age, marital status, other drivers in the household, etc, is considered misrepresenting yourself. If the insurance company find out they may be able to cancel your insurance.
  3. Insurance Fronting. Everyone knows that younger people get charged a lot more for insurance than older people. If an insurance policy is bought under parents names instead of the teenager, then the insurance company has the right to cancel the insurance. Not all companies will do that but if the claim is big enough then it might make them decide to.

It’s best to be honest and upfront when getting a car insurance policy. You’ll never know when you’ll need it and you don’t want it to be pulled out from underneath you when the time comes to actually use it. So go out an find the best car insurance and get the best car insurance rates.

Hi, Stranger! Leave Your Comment...

Name (required)
Email (required)