Five Things That Could Rescind Your Auto Insurance Policy

In some ways, the relationship between you and your auto insurance provider is built on the same principles you have with friends and family. The key principle in this relationship being honesty. Auto insurance providers collect monthly payments in order to build a fund through which they can cover you for the damages you could potentially incur in the event of a serious accident. Your monthly premium is based on your risk factor. Insurance companies determine your risk through assessing your driving record, credit history and vehicle type, among other things.

If you are involved in an accident or have incurred a traffic violation and have not shared this information with your insurance provider, they have the right to immediately rescind your policy as a penalty. Like any contract, if you fail to follow the laws and bylaws – such as disclosing anything relevant to your driving and your risk as a driver – your policy is subject to termination.  

Here are a couple quick and common examples of what you most definitely shouldn’t do if you don’t want your insurance provider to rescind your policy.

An Undisclosed Driver

A common and fairly egregious mistake is not to note to the insurance company that you won’t be the only person driving your car. If a friend or someone in the family uses the car often – such as a spouse or teen might – then not informing the insurance company of this could mean that in the event of an accident, the company has every right to refuse to cover your damages while canceling your policy.

As mentioned above, insurance companies price their premiums based on the risk they take by representing you as a driver. The more of a risk you are on the road, the more expensive your policy. While you may be a safe, careful and low-risk driver, your teenage son or daughter is an entirely different story.

A False Address

You don’t have to necessarily lie about your address – all it takes is failing to inform the insurance company that you’ve moved, and they could use the false information you’ve given them as a reason to rescind your policy and leave you out to dry.

Always remember to update all of your financial and legal standings after a big move. Talk to your bank and your insurance provider to make sure your information is up-to-date.

A Rescinded Driver’s License

This one’s really, really obvious – if you’re no longer eligible to drive in the first place, then your insurance company will cancel your policy. There is no waiting period for you to earn your license back before continuing the policy – if you don’t have a valid license anymore, the company will typically send you a non-renewal notice.

Too Many Tickets or Incidents

Like any private institution, an insurance company can choose not to do business with you as long as it’s for a valid reason – and one particular valid reason is that you’ve been getting into too many fender benders and have overdue parking tickets.

One or two incidents in a year or so is no trouble – several incidents in a year can be worrisome, but even more troubling is when you’re getting into them on the monthly basis. If you want to keep your insurance, practice safe driving.

Wrong Title On the Vehicle

If you’ve sold your vehicle to your son, daughter, neighbor, friend or colleague without first canceling your policy, you’re in for getting the policy canceled on you. There are special rules for minors, as well – if your child isn’t 18 yet, then even as the owner of a brand new car, for legal reasons you as his guardian will usually have to be on the policy as well.

If your insurance has been canceled on you, you typically have a grace period of anywhere from two weeks to over a month. In this time period, you should compare car insurance online to find the best provider, lest you end up with no insurance at all.