Three Reasons That A Car Insurance Company May Drop You
Car insurance is a required part of owning and operating a car. Automobile insurance protects a driver from a financial hit in case of an accident, and an insurance company will require a policy holder to prove that they are a safe risk before they issue a policy. For some drivers, unsafe driving habits may simply result in a higher insurance rate, but for others it can result in a loss of coverage when the automobile insurance provider decides that the risk of an accident is too high. There are other behaviors that will flag an insurance company to discontinue an insurance policy with a customer, and people that experience dropped car insurance, it may be difficult to find another affordable policy.
Failure to pay premiums, a poor driving record, and fraud are three actions that could result in dropped car insurance. The first is an obvious consequence to a lack of payment; companies do not continue to provide services to customers that do not pay them on time. Insurance companies rely on those payments to retain funds for numerous business uses, so if a customer is not making timely payments, their policy can and most likely will be discontinued.
Even when a customer is making payments, though, there are other reasons why an insurance company may choose to discontinue services. A poor driving record can also endanger the status of an automobile insurance policy; multiple tickets or accidents can indicate that a driver will cost an insurance company more money over time than the customer is paying monthly, and will drive them to end coverage. This protects them from the financial liability that could occur with that driver.
The final reason an insurance company will drop coverage is because of fraud. Filing incorrect information on an accident report is not only illegal, but can put the insurance company at further risk with litigation in the future. If evidence of fraud is identified, the insurance provider will terminate the relationship with the customer.
To be a responsible automobile owner, drivers should carry adequate coverage in case of an accident to ensure that any damage can be repaired. This requires trust on both the driver and the insurance provider; the driver makes monthly payments for the coverage, and the insurance company expects the driver to act in their best interests by operating their car in a safe way. They also expect that customers pay their bills on time and, if an accident does occur, they demand that the driver be truthful in the account of the accident. If any of these requirements aren't met, an insurance company can choose to terminate the car insurance coverage.