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.
*Above mentioned prices are for Honda City EX 1.5L, 2017 model.
Can Your Provider Actually Pull Away from the Coverage?
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.
Is Your Provider Legally Allowed to Cancel Your Coverage?
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.
What Part of Coverage Could Be Cancelled?
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.
When Can Providers Cancel Your Insurance After an Accident?
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:
If the policyholder has been making accidental claims continuously for a long time (the observation duration is generally set at 3 years)
If the policyholder causes an accident due to reckless driving that results in serious damages to the own vehicle as well as the third-party vehicle
If the policyholder has been involved in an accident that results in their driving license being revoked
If the policyholder has been committing other serious traffic and road violations
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What is Non-Renewal of Car Insurance? How is it Different Than Cancellation?
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.
How to Avoid Car Insurance Cancellation?
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:
Always think and analyse the situation multiple times before you go ahead and file a claim. If the damages are small enough for you to handle on your own, consider doing that instead of filing a claim. Save your claims for more significant damages.
Be responsible both on and off the road. In addition to driving carefully, ensure that you take good care of your car. If you prove to be an irresponsible vehicle owner with a car in bad condition, the provider may increase the premium amount.
Do not defer premium payments of your plan. Always make payment on time and renew your plan before the grace period ends.
Keep everything on the table when conversing with your insurance provider. Hiding facts and figures will only bring negative results for you. Ensure that you always tell the whole story and keep things transparent.
Read, understand, and remember the underwriting of your car insurance plan. These are the rules by which your provider will play and decide the fate of your coverage.
Car insurance cancelled after an accident sounds like a rather unfortunate addition to an already grim series of events. However, you can easily prevent something like this from happening.
Be a responsible driver and always follow traffic rules properly. Moreover, besides driving carefully on the road, you should try to keep your car in good, running condition off the road.
Do not make small and easy-to-cover claims against your car insurance plan. It will only result in alerting the provider of your excessive number of claims and may lead to an enquiry.
Be responsible with your payments. If a situation like non-renewal arises without any plausible solutions, be ready to look for a new car insurance plan.