Why Was My Car Insurance Cancelled?


Car insurance can serve a lot of purposes, but ultimately, it is your protection against financial difficulties for the repairs, medical bills, and other liabilities that you’ll incur if an accident ever happens.

For those of you who’ve chosen either long-term or short-term car insurance, there surely are monthly payments to be made on top of your living expenses. But if the insurance is not a tailored fit for your budget, these payments can make a dent on your savings. However, paying your premium isn’t the only thing that you should be concerned about.

### Why Did My Insurance Provider Cancel My Auto Insurance Policy?

Did you know that you’re also at risk of losing your insurance if you’re not careful enough? Believe it or not, some car insurance providers can refuse to renew your policy or even cancel the policy itself if you commit certain acts. This means that you will have to get another insurance policy from another providers.

An insurance company can cancel a policy or refuse the renewal of a policy provided that they issue a notice to the insured individual. However, the Insurance Code of the Philippines states that the notice of cancellation will not be effective unless it is based on a number of reasons. To directly quote Section 64 of the Insurance Code of the Philippines:

“*No policy of insurance other than life shall be cancelled by the insurer except upon prior notice thereof to the insured, and no notice of cancellation shall be effective unless it is based on the occurrence, after the effective date of the policy, of one or more of the following:
(a) non-payment of premium;
(b) conviction of a crime arising out of acts increasing the hazard insured against;
(c) discovery of fraud or material misrepresentation;
(d) discovery of willful or reckless acts or omissions increasing the hazard insured against;
(e) physical changes in the property insured which result in the property becoming uninsurable; or
(f) a determination by the Commissioner that the continuation of the policy would violate or would place the insurer in violation of this Code.*”

It is also stated in the Insurance Code that any notices to the insured individual should be sent to the address of the insured that is stated in the policy, along with information regarding the notice of cancellation. Should the insured individual request it, the insurance company will provide further facts on the reasons of the cancellation of the policy. Here is the excerpt from Section 65:

“*All notices of cancellation mentioned in the preceding section shall be in writing, mailed or delivered to the named insured at the address shown in the policy, and shall state (a) which of the grounds set forth in section sixty-four is relied upon and (b) that, upon written request of the named insured, the insurer will furnish the facts on which the cancellation is based.*”

In terms of the renewal of the policy, the Section 66 states that:

“*In case of insurance other than life, unless the insurer at least forty-five days in advance of the end of the policy period mails or delivers to the named insured at the address shown in the policy notice of its intention not to renew the policy or to condition its renewal upon reduction of limits or elimination of coverages, the named insured shall be entitled to renew the policy upon payment of the premium due on the effective date of the renewal. Any policy written for a term of less than one year shall be considered as if written for a term of one year. Any policy written for a term longer than one year or any policy with no fixed expiration date shall be considered as if written for successive policy periods or terms of one year.*”

Mainly, non-payment of your premium can be a major factor in the cancellation of your policy – sometimes it can only be the sole factor, even. If you fail to pay your premium, it is a legitimate reason for your auto insurance provider to give you a notice of cancellation, as stated above. On the other hand, if you have the intention of renewing your policy, you should always have your payment ready before your due date because not all insurance providers can give you a grace period.

And while you might get away with paying late with minimal consequences, because you’re technically still paying off what you missed, non-payment for a long period of time will eventually result in the cancellation of your insurance. Not only will you lose your insurance policy, but you’ll also suffer the consequences that will follow you even after the policy is cancelled, as what you do in your current policy may impact your ability to get another one in the future.

### Fraud and Material Misrepresentation

Also, should you be discovered to have committed fraud or material misrepresentation, you might also get a notice of cancellation from your insurance provider. To expound, material misrepresentation means you’ve innocently stated incorrect information to your insurance provider believing that it is true.

These may be significant facts that may have produced a different outcome while you’re getting the policy, like causing the insurance provider to issue a different type of policy, a different premium, or they may not even issue the policy at all. However, fraud is a different story. When the misrepresentation of materials was proved to be intentional or if you have stated something that you know was not true, then it is fraud and it is a crime. Be warned that you may be sued if this happens.

Basically, the difference between the two is that material misrepresentation is innocent, while fraud is deceit or has malicious intent to deceive.
Those mentioned above are some of the reasons why your insurance provider might cancel your policy. The bottom line is, if you receive a notice of cancellation because of reasons disclosed by your provider, immediately talk to them and straighten out the issue, as you might suffer more than just fees and a cancelled policy otherwise.

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