The New Jersey Department of Banking and Insurance provides clear requirements for vehicle insurance cancellations. These mandates apply to all New Jersey auto policyholders, as well as all New Jersey insurance carriers.
Policyholders are not required to wait until the policy’s expiration date to change insurance carriers. New Jersey policyholders have the right to cancel their auto insurance policy at any time. Insurance carriers are required to refund any unused premium to the policyholder within 60 days of the requested cancellation date. Policyholders must provide their insurance carrier with proof of their new policy coverage in order to cancel the policy.
Newly purchased policies go through an underwriting process. During this process, the insurance carriers verify the policy information for accuracy and ensure that the information meets the company’s underwriting guidelines. New Jersey provides its insurance carriers with 60 days to complete this process. As a result, New Jersey auto insurance carriers have the right to cancel a new policy within the first 60 days of inception if the policy does not meet its guidelines. New Jersey carriers must provide the policyholder with an underwriting cancellation notice. The cancellation must provide the policyholder with at least 20 days’ notice and provide a reason for cancellation.
Under certain circumstances, New Jersey auto insurance carriers are permitted to cancel coverage during the middle of a policy term. These mid-term cancellations are only permitted for nonpayment of premium, license suspensions or revocations, and upon the discovery of policy fraud. Nonpayment cancellation notices must provide a 15-day notice of cancellation. License suspensions, revocations and fraud cancellations must provide a 20-day notice.
New Jersey insurance carriers can cancel a policy at any time during the policy term if fraudulent information is discovered. Insurance fraud includes misrepresenting and omitting information, drivers and vehicles in order to avoid higher insurance premiums. Upon discovery, the insurance carrier will notify the policyholder of the cancellation. Serious fraudulent information may be reported to the New Jersey Department of Insurance and may result in fines, penalties and jail time.