If your car insurance policy is cancelled, you may need to buy another policy to make sure you’re not driving without insurance. However, insurers often ask about your prior claims history and policy cancellations as part of their car insurance application process. If you’ve had a car insurance policy cancelled in the past due to fraud or non-payment of premiums, it may be harder to find an insurer that will accept your application.
When you buy a car insurance policy, you enter a contract with the insurance provider. The insurer can terminate this contract if necessary, though your insurer must notify you in writing. If you haven’t been told the reason for cancelling the policy, you can ask your insurer for clarification. If you believe your policy was incorrectly cancelled, you can file a complaint with the Australian Financial Complaints Authority (AFCA).
You may have your car insurance cancelled due to non-payment of the premium, although missing a single payment may not mean the immediate cancellation of your policy. Consider checking if you have a direct debit for your premium payments set up that needs to be updated or changed to another account. If you’re facing financial difficulties and are unable to pay monthly premium instalments, you can talk to the insurer about how to lower your premium. Alternatively, you can switch to another insurer offering a cheaper policy.
Your insurer may also choose to cancel your policy if your circumstances have changed significantly, making insuring you riskier for the insurer. For instance, you may have modified your car without informing the insurer, which can be seen as a breach of contract on your part. Similarly, your car insurance could be cancelled if the insurer discovers you failed to report a car accident to them.
Your insurer cancelling your policy is not the same as your policy being declared void. Insurance providers may declare a policy void when you file a fraudulent claim, such as buying insurance in someone else’s name when you are the primary driver. Another example of fraudulent activity is driving in an illegal or dangerous manner with the intention of damaging the vehicle and claiming insurance. In such cases, any claims you’ve filed will be denied, and the insurer may even file a police complaint against you.
If your insurer does not wish to continue providing you with car insurance, rather than cancelling your policy immediately, they may instead decline applications to renew the policy when its due date arrives. This can happen for various reasons, such as if your circumstances have changed, or you’ve filed too many insurance claims, changing your risk level as a customer. You can try to find out why your renewal is being declined, but also consider checking if your policy contains a renewal guarantee clause. You can raise a dispute with the insurance provider’s Internal Dispute Resolution (IDR) department if you feel you’ve been unjustly denied your car insurance renewal.
You may only get a few days’ notice if your renewal is declined. As a result, you may need to buy another insurance policy quickly to avoid being underinsured or uninsured. Consider checking the coverage your car insurance policy offered before purchasing a new car insurance policy after a non-renewal. You can compare car insurance quotes online to save time on finding a suitable policy. Some insurers may give you a discount if you buy the policy online as well.
This article was reviewed by Georgia Brown before it was published as part of RateCity's Fact Check process.
