Reasons Why Your Car Insurance Can Be CancelledMarch 23, 2023
● Car owners in the UAE are legally required to own at least a third-party car insurance policy.
So, you go to the insurance company's website and buy a policy with the coverage, benefits, and features you need.
You customise it with add-ons and pay the premium to complete the purchase.
Now, you needn’t worry about financial and legal liabilities on the road, right?
● You don’t - provided that the insurer doesn’t cancel your insurance policy. Yes, they can cancel it even if you’ve paid the premium and followed all the steps. Having your car insurance cancelled can be a stressful and confusing experience. It can leave you without coverage at a time when you need it the most.
● In this article, we will discuss the reasons for car insurance cancellation and what you can do to avoid them.
Reasons Why Your Car Insurance Can Be Cancelled
Here are a few things that might result in the cancellation of your car insurance policy -
1️⃣ Raising fraudulent claims
Insurance companies have strict policies in place to detect and prevent fraudulent activities. If they find out that you have made a false claim, they can reject the claim and take legal action against you. In addition, the insurance company may cancel your policy and refuse to renew it in the future. Hence, it is important to be honest when making claims and only report legitimate losses or incidents.
2️⃣ If the motor vehicle licence is terminated
If your motor vehicle licence is terminated, it can affect your eligibility for car insurance coverage. The insurance company might cancel the policy and therefore, it is important to maintain a valid driver's licence and follow traffic laws.
3️⃣ If your vehicle goes for a total loss
When your vehicle goes for a total loss, you get the entire cover amount mentioned in the policy copy. Once the insurer has paid the entire claim amount to you, the policy gets terminated as there is no point continuing it.
4️⃣ If you make multiple claims in a short time span
If you raise multiple claims within a short period of time, it can indicate that you are a higher risk for the insurance company. In such cases, the insurance company may choose to cancel the policy, as it increases the overall risk and cost for the company. For example, Gaurav and Girish are two car owners who own the same type of car. Gaurav drives within speed limits and follows traffic laws strictly. He has raised no insurance claims for his car. However, Girish is a careless driver and often gets fines and black points for speeding. He has also raised multiple claims within a short span of his car purchase. Under such circumstances, the probability of Girish facing cancellation of his car insurance policy is higher in comparison to that of Gaurav.
5️⃣ If you don’t disclose material facts
Providing honest and complete information when applying for car insurance is very important, as insurance is a contract of trust. If you fail to disclose important details, such as modifications to your vehicle, it can result in the insurance company cancelling the policy and refusing to pay any claims.
6️⃣ If you get into too many traffic violations
Violating traffic rules can result in black points on your driving licence. Insurance companies consider many factors when determining your premium, and a history of traffic violations can lead to higher premiums or even policy cancellation. It is thus crucial to obey traffic laws and maintain a good driving record to avoid the risk of policy cancellation. Your insurance policy may be cancelled by the insurance provider for several reasons. This could differ depending on the insurance provider, so it's important to thoroughly review the policy's terms and conditions before buying a policy.
How Can You Prevent Your Policy From Being Cancelled?
You can try to follow these steps to avoid policy cancellation –
👉 Avoid Making Back-to-Back Claims
Making back-to-back claims can make your profile highly risky for the insurer and potentially lead to increased premiums or even policy cancellation. File a claim when it is absolutely necessary, like a major accident or theft.
👉 Provide Accurate Information
When purchasing car insurance, it is essential to provide accurate information about your driving history, the vehicle you own, and your personal details to the insurance company. This will help you to avoid any issues in the future when making a claim. Any misrepresentation or hidden information may lead to policy cancellation or claim rejection.
👉 Avoid Fraudulent Claims
Making false or exaggerated claims can result in severe consequences, including policy cancellation. It is essential to be transparent when making a claim and to provide all the relevant details to the insurance company.
👉 Obey Traffic Laws
Following traffic laws and regulations helps you maintain a good driving record. This includes obeying speed limits, using seat belts, etc. By doing so, you can reduce the risk of being involved in accidents and avoid black points that could impact your insurance premium. Having a bad driving record can lead to policy cancellation as well.
There are various reasons why a car insurance policy can be cancelled. And, a cancelled policy can lead to both financial and legal repercussions. You should be aware of the potential risks and take steps to minimise such circumstances, so you are covered, always.