Insurance Companies Right to Drop Insurance
An insurance policy is a contract between you and an insurance company that offers protection from some kind of defined risk. This could be the risk of death, illness and injury, or a car accident. But your insurance company could drop your insurance under certain circumstances.
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Warning
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Insurance companies can drop your insurance coverage if you lie on your application, if the insurer becomes insolvent or if you violate any of the terms and conditions of the contract. For example, suicide is a common violation of a life-insurance contract.
Time Frame
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Most insurance companies need to give you a warning or some kind of advanced written communication notifying you that they will be dropping your coverage. This notification is designed to give you time to find other insurance.
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Prevention/Solution
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Don't lie or misstate any material facts on your insurance application. A material fact is one that leads to a decision of whether an insurance company would offer you insurance. Check insurance company ratings with rating agencies like A.M. Best to make sure you are doing business with reputable companies that are financially stable. Finally, make sure that you do not violate any of the terms and conditions set forth in the insurance contract.
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References
- Photo Credit family image by Mat Hayward from Fotolia.com
