An auto insurance policy is a legally binding contract between an insurance company and the person who buys the policy, commonly called the "insured" or "policyholder." In exchange for payment of a specified sum of money (called a "premium"), an insurance company agrees to pay for certain types of loss or damage as specified by your contract.
Your automobile is a valuable asset which could be very expensive to repair or replace if is damaged. Part of what auto insurance does is to pay for the repair or replacement of a vehicle which is damaged either as a result of your driving or from other causes not related to driving, such as theft or storm damage. Auto insurance also covers your legal liability which could arise if you injure another person or damage another person's property with your vehicle.
Most auto insurance policies are issued for a stated policy "term", such as six months or one year. Any limitation on cancellation applies only during the policy term. Once your policy has reached the end of its term, insurance companies can usually decide to discontinue or decline renewal of your policy for any reason not prohibited by law.
Once an auto insurance policy is issued, an insurance company cannot cancel it except for reasons specifically stated in the policy. State laws usually limit what a company can include in the "cancellation" provisions of its policies. Some justified reasons for cancellation of an auto insurance policy by an insurance company include:
In most states, an insurance company must give the policyholder a written notice of at least 30 days prior to the end of the policy term if it does not intend to renew an automobile insurance policy.
Dealing with your insurance company can be an arduous task. If your insurance company cancels yours policy before its term expires and does not have a justifiable reason for doing so, then you should retain an attorney. Automobile insurance policies can be extremely detailed and difficult to read. An experienced insurance attorney can explain the policy's complex legal terms and inform you whether you have a case.
Last Modified: 05-31-2012 04:02 PM PDTLaw Library Disclaimer
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