Another aspect of Pennsylvania car insurance coverage involves policy cancellations – how they happen and why they happen. Insurance companies evaluate you as a policyholder in order to determine your risk factors. If you are a “good risk,” your policy will remain in effect, and if you are determined to be a “bad risk,” your policy may be canceled or not renewed.
Some of the areas that insurance companies review include:
Claims – Do you file claims frequently or for large amounts?
Driving record – Do you have a bad driving record (speeding, DUI, etc.)?
Credit history – Do you have bad credit? Have you filed for bankruptcy?
Reasons for Cancellation by the Insurance Company
Your car insurance can be canceled for several reasons, including making false claims on your application, having too many accidents on your record, being convicted of a DUI, or having your driver’s license suspended. Failure to make your insurance payments can also result in cancellation.
If you feel you’ve been unfairly canceled, you can appeal the decision. While you are appealing the decision, however, you’ll still need to obtain new car insurance from a different carrier.
Canceled Car Insurance Means You Can’t Legally Drive
It’s illegal to drive without Pa automobile insurance. If your policy has been canceled, you’re off the road until you obtain a new insurance policy. A cancellation will affect everyone named on the policy, so if other family members are included in your policy, they will also be unable to drive until a new policy is in effect.
If you’re caught driving without insurance, you’ll face a fine, court fees, a conviction on your record, and you may also have your license suspended for a period of time.
The Effect Canceled Insurance Has on Car Loans
A canceled insurance policy can also impact your car loan. Most car loans require that the vehicle owner carries full insurance coverage. Your insurance company will inform your lender that it’s canceling your car insurance policy. At this point, three possible things might happen:
Your lender will give you a short period of time to obtain a new insurance policy.
Your lender will obtain its own insurance policy and add the cost to your monthly payment.
Your lender will repossess the vehicle because you are in violation of the contract.
According to the Pennsylvania Code, notices of cancellation or refusal to renew shall meet the following requirements:
- The form shall be clearly labeled: ‘‘Notice of Cancellation or Refusal to Renew’’ and given to the insured.
- The insurer must provide the specific reasons for the cancellation or include a statement that the reasons will be supplied upon the written request of the insured.
- The reasons for the cancellation or nonrenewal shall be clear and complete. They shall be stated such that a person of average intelligence and education can understand them.
- The form shall include advice that the insured has the right to request a review of the insurer’s action within 10 days of receipt of the reasons for cancellation or nonrenewal.
- Pennsylvania law does not require companies to extend a grace period for premium payments.
What is the Pennsylvania Assigned Risk Plan?
Pennsylvania’s Assigned Risk Plan is a program that offers automobile insurance to those who are unable to obtain coverage. All insurance companies writing automobile insurance in the commonwealth are required to participate in the plan. Applicants are assigned to insurance companies in proportion to the amount of business each company writes in the commonwealth.
Can your Policy be Canceled Due to an Auto Accident?
An auto insurance company’s ability to cancel policies due to auto accidents is strictly limited by Pennsylvania statutory law.
One of the circumstances in which an auto insurance company is permitted to cancel or refuse to renew a policy of auto insurance is when the policyholder has had 2 or more at-fault car accidents within a 3-year period. However, there are exceptions to this rule, including those car accidents that occur when an insured’s vehicle is lawfully parked.
According to Pennsylvania auto insurance law, an insurer may not cancel, refuse to write, or refuse to renew an auto insurance policy for any of the following reasons:
(2) Residence or operation of a motor vehicle in a specific geographic area.
(6) National origin.
(8) Marital status.
(10) Lawful occupation, including military service.
(11) Another insurer’s refusal to write a policy, refusal to renew an existing policy, or their cancellation of a policy.
(12) Illness or permanent or temporary disability where the insured can medically document that such illness or disability will not impair his ability to operate a motor vehicle.