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While it is not an everyday occurrence, we can often spot someone being reckless behind the wheel just because they are covered by car insurance plans. What most people fail to realise is that insurance plans are not forever. If you are being reckless and irresponsible towards your insured assets, the providers may not approve your accidental claims, or even cancel the coverage.
Similarly, there are several other reasons why a provider may reject your car insurance claim. While it’s not a very common thing that you will come across every other day, your coverage can indeed be cancelled even after an accident. Let’s learn about car insurance cancelled after accidents and what can you do in such a situation.
Since this particular event appears improbable, many would question the reality of insurance plans being cancelled. Unfortunately, insurance providers can indeed cancel your car insurance plan after an accident. At the same time, it should be noted that this does not apply to every road accident ever.
There are special circumstances in which this action can come to play. Cancellation of your car insurance plan is only likely if the accident has been caused by you, causes significant damage, and has even resulted in your license being revoked. In short, ‘car insurance cancelled after accident’ is a phrase for extreme situations only.
Now comes the question of legalities. Many policyholders may wonder whether insurance providers are even allowed to cancel coverage. A crucial aspect behind such a question is that the proceedings of your car insurance coverage are highly dependent on the underwriting of the plan. Underwriting is the process through which your providers determine the level of risk you bring for the provider as a customer.
The underwriting process includes the determination of the inclusions, exclusions, premium rates, and conditions of a particular insurance plan for an individual. If the underwriting of your plan gives the provider a right to cancel car insurance after certain criteria have been met, they can legally cancel your car insurance plan.
Comprehensive car insurance plans can be divided into two basic parts – third-party liability and own damage cover. As third-party liability coverage is compulsory for every vehicle in the UAE, insurers can only cancel the own damage cover of a policyholder.
Additionally, own damage cover is the place where an insurance company really takes a hit. If the policyholder is generally reckless with their driving and fails to ensure proper maintenance of their vehicle, they will keep making claims against the own damage cover of their plan. This is another reason why insurance companies in the UAE are allowed to cancel these coverages if necessary.
Cancelling a car insurance plan comes with quite a few conditions and considerations, as a provider will not take an extreme decision like this one on a fluke. Car insurance is cancelled after accidents only when certain criteria have been met. Given below is a general outline of the same:
Non-renewal of a car insurance plan is when the provider decides to discontinue the business with you after completing the running term of your plan. Non-renewals are done only after a notice has been sent to the policyholder in advance, as this gives them the time to switch to another provider and secure a new car insurance plan. The notice could be sent a maximum of 30 days in advance.
You should note that the reason for the non-renewal of a car insurance plan does not have to be as extreme as cancellation reasons. If the insurance providers feel that you have become a high-risk customer from them, they can choose to not continue business with you.
Several things can occur before even non-renewal or cancellation. For instance, in case of high damage-causing accidents where you are at fault but not due to reckless driving or general carelessness, the insurance provider may simply increase the premium next term onwards. More such instances, like traffic violations, when repeated over time, can result in higher premiums or non-renewal of the plan.
Apart from being a serial violator of traffic regulations and a reckless driver, several other things can result in car insurance cancellation. A few simple steps can be taken to ensure that you do not end up with increased premiums, non-renewals, or plan cancellations. Given below are a few such tips and tricks for you to keep in mind:
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