Posted : 05/01/2011
Insurance companies are like fair-weather friends: They’ll drop you if you lie to them, owe them money or drink too much.
As a general rule, car insurance companies do not have the right to arbitrarily cancel your policy. However, most states define the reasons an insurer can cancel you before your policy period is over. And an insurer can decide not to renew your policy at the end of each insurance period.
The Insurance Information Institute (III) says that while the majority of policies are renewed, some flubs can land you in hot water.
"A lot of consumers are surprised to learn that their insurance company has the right to dump them because they don't realize that an insurance contract involves a reciprocal relationship," says Michael Barry, an III spokesperson.
In some states, car insurance companies must disclose the reason for nonrenewal. In others, the company can simply walk away from you without sharing any reasons. (Insurers generally need to cite a reason when they cancel you, Barry says.)
Here are five activities that can make your car insurance company boot you from its customer list.
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