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Car insurance plans play an undeniably important role when it comes to driving in the UAE. As the law states, having a proper, valid car insurance plan is mandatory if you want to drive your car in the UAE. Keeping this in mind, things can get problematic if you end up facing car insurance cancellation in the UAE. While it is rare, car insurance policy cancellation at the provider’s discretion can happen.

If you are thinking, “well, that’s okay because I’ll just buy a new car insurance plan”, then stop and ponder for a moment. The reason car insurance cancellation is such a substantial matter is that it is exceptionally hard to get another one later on. One should note that providers always cancel insurance based on concrete data. As all insurance details are available to every provider for investigation, this is why it is crucial to understand the circumstances under which your car insurance gets cancelled and what you can do to save it. 

When Can Your Car Insurance Policy Get Cancelled?

Car insurance plans are your fall back options in the time of need. However, even though insurance plans claim to be there for you through every difficult situation, there are several instances when your insurance policy may stand null and void. All insurance companies lay out a set of conditions in their contracts outlining the terms of car insurance policy cancellation. While these terms differ for each provider, they also differ for each policyholder. 

If you fail to comply with the terms of your contract or land in circumstances that present you as a high-risk candidate, there is always a chance of facing grave trouble like insurance cancellation. Given below are some of the common reasons that may lead to car insurance plan cancellation:

  • Making One Too Many Claims: Yes, it is the endgame for every kind of insurance plan claim. However, making too many claims against your car insurance plan can prove harmful for you as a policyholder. At the end of the day, your provider is a business entity that aims to generate revenue and optimise its expenditures. Having policyholders who make too many claims frequently brings in higher risks for the insurance provider. Consequently, if you keep making claims in excess, even within the assured sum limit of the plan, the provider may choose to drop you as a customer. 
  • No-payment of Your Premium or Late Payments: Frequently missing your payments, waiting for the last moment to pay premiums, or missing the payment deadlines can also lead to car insurance policy cancellation. Car insurance cancellation due to a missed payment may be handled if your provider agrees to make an exception. However, if you establish a trend of late payments, your provider may decide to drop you as a customer altogether. While one missed payment can be seen as an emergency or an accident, a trend is often not ignored. 
  • Causing Intentional Damages to the Car: As a car owner, you are expected to take good care of your ride. In that light, causing intentional damage to your car and expecting the insurance provider to cover it will lead to car insurance cancellation. Not only it is an unethical practice but also shows that you are not a reliable and responsible car owner. Insurance companies avoid having such candidates in their client base. 
  • Significant Changes in Life: While changes are always inevitable, some of these changes are big enough to make a significant impact on your car insurance policies. For instance, if you have recently contracted a disease that impacts your ability to drive, the insurance provider may consider cancelling your cover. 
  • Changed Risk Factor: The risk factor that you bring in as a customer may change drastically even without any significant changes in your life. For example, causing a big accident that results in extreme damage to your as well as the third-party vehicle will increase your risk factor and may lead to car insurance policy cancellation. 
  • Criminal Record: If it turns out that the policyholder has a criminal record, the provider may cancel the car insurance plan. Similarly, if the provider finds out about the criminal record after selling a plan to the customer, the policy may get cancelled. 
  • Moral Hazard: Moral risks or moral hazard occurs when the insured person acts recklessly or takes more risks when they are aware that someone else is protecting their interest. A major instance of that is driving carelessly because you have a comprehensive insurance plan that will cover the damages if any. If a policyholder is found guilty of creating a moral hazard, the insurance provider may choose to cancel their insurance policy. 
  • Making Fraudulent Claims: Whether it is in the insurance world or another field, frauds are never welcomed. Submitting a fraudulent claim against your insurance plan will lead to car insurance cancellation in most cases. Fraudulent claims can be of different types. Any immoral practice to get insurance claim settlement money is regarded as fraudulent, like driving recklessly and damaging the car on purpose to have previously existing damages covered by insurance. 
  • Using Personal Car for Commercial Use: Personal cars are not meant to be used for commercial purposes. This fact is also reflected in car insurance, as the insurance plans available for personal cars are not equipped to handle damages that commercial activities may cause. Frequently using your car for hired carpooling, transporting goods, and similar activities may lead to car insurance cancellation. 
  • Too Many Traffic Violations: Having an excess of violations on your driving record may also lead to car insurance cancellation of your car insurance plan. The UAE is stringent about traffic rules, with every violation fined as per the intensity of the offence. On top of it, all violations go on your record and can be accessed by insurance companies at any time. Multiple violations represent you as a careless driver or an incompetent one. Either way, you become a high-risk customer for the insurance company.  

How to Avoid Car Insurance Cancellation?

Having your car insurance plan suddenly cancelled is not a pleasant experience. Stress and panic are some of the things you may experience if you find out that your car insurance plan is being cancelled. However, while the insurance company will have its reasons clear before taking such a step, you may still have a chance to negotiate your way out of it. Negotiation won’t be an option if your plan is being cancelled due to reasons like fraudulent claims. At the same time, reasons like too many claims may still have a negotiation window. Try and speak with the responsible authority on the matter at your insurance company. Make your case and present strong points. If your case is genuine indeed, you may be able to persuade the insurance company to keep your plan running. 

How Many Claims Are Too Many? What Can Be Done Here?

While there is no magic number here, what’s sure is that too many major claims from a policyholder may trigger a series of investigations from the insurer’s side. So if you think that making one less claim will save your plan from getting cancelled then you may be mistaken. If your insurance plan gets cancelled due to too many claims, the best thing you can do is conduct a self-examination of your previously made claims. Given below are the steps you can follow:

  • Observe how many claims you have made so far and the frequency for each tenure. 
  • Examine the total amount that you have received so far as to claim settlement. 
  • Check out the major claims and figure out the root cause. For instance, are major claims related to accidental damages, theft, or something else?
  • See what you have done to reduce the risk factor here. For example, if theft has been the major reason for most claims, have you installed an anti-theft device in your car?  

Once you have these things straightened out, contact the insurance company and make your case against car insurance cancellation. Explain what you have done to reduce the risk on your part. Have you been taking driving lessons? Installed an anti-theft device? Moved to a safer location where the risk of theft is lower? Get proper answers to these facts, as they will make sure that you can present hard facts to persuade the insurance company. If you manage to prove that you have made substantial changes to reduce risk, you may get your coverage sustained. 

What is Loyalty Worth Here?

The business world thrives on the concept of loyalty, meaning that returning customers or the ones who have stayed with a provider for long usually get preferential treatment regardless of the type of business. You can use this concept of loyalty to your advantage when your car insurance cancellation is concerned. 

If you have been a model customer from the beginning and the car insurance cancellation is not due to fraudulent claims, moral dilemma, etc., the insurer may consider your loyalty. It is true that the final blow will come down to the revenue, but showing that you have been a loyal customer for long before the unfortunate events began can be helpful to build your case. Point out that you have given enough business to the provider before the major claims issue began. The goal here is to make the provider aware of the revenue they have generated through you as a client. 

Getting a New Car Insurance Plan 

The next order of business would be to find another car insurance plan as your fallback option. There is always a possibility that your provider may not budge even after all the valid points you have made to save your case. And since having a valid car insurance plan is mandatory to drive in the UAE, you must make arrangements to get another plan if your current insurance gets cancelled. 

While you are waiting to hear back about the car insurance cancellation case from your current provider, be on the lookout for other options. You may get higher premium quotes from other providers since everyone takes the previous claim into account when offering insurance. If you have a solid case and reasoning for your previous claims, you may be able to get a new plan with another provider. 

A key aspect here is that all insurance companies don’t prepare the same underwriting rules. This can give you the window to jump ship if things do not appear promising with your current provider. You can also consider taking your car insurance plan with brokers like Policybazaar UAE. As brokers like us work with multiple providers, getting another insurance plan would be easier for you. 

However, just because you manage to get an alternative, don’t leave the fight to keep the current one. Give it all you have to save your current car insurance plan from cancellation. If nothing works out despite your best efforts, you will always have your other alternate plan to rely upon. 

FAQs

Q. Will my premium rates go up if I buy another car insurance plan after car insurance cancellation?

Ans: Yes, your car insurance premium may increase if your current insurance plan got cancelled. The hike in the premium you will get with your new plan will depend on many other factors though. Too many claims made previously, increment in risk factors, and condition of the car are some of these factors. 

Q. How many claims can I file before my car insurance gets cancelled? 

Ans: There is no pre-specified number of claims you can make before your plan gets cancelled. The idea here is the ratio of money spent in claim settlement and revenue generated with premium. Providers consider car insurance cancellation only after analysing the severity of the claims made during a certain tenure, generally 36 months. 

Q. Will my car insurance necessarily get cancelled after an accident?

Ans: No, it isn’t an underwritten rule to cancel every car insurance plan after an accidental claim. If the accidental claim concerned was of a substantial amount, the provider may simply decide to increase the premium upon renewal. However, if you have made claims of similar nature multiple times, the provider may consider cancelling the plan. 

Q. What is the best way to present a rebuttal for car insurance cancellation?

Ans: The ideal way to represent your defence is by proving that you have taken steps towards changing things. For instance, if you made too many theft claims in the past 3 years, show the steps you have taken to reduce the risk of theft. It can be the new anti-theft device you installed in the car or any other protective measure. If the car insurance cancellation is due to non-payment or late payment of premiums, demonstrate to the provider that you have become more responsible and stable financially.