CANCELLATION OF AUTO INSURANCE

Can your automobile insurance company raise your premium? Can the company cancel your coverage? Pennsylvania law provides some protection against premium increases and policy cancellations. A premium can be increased if a vehicle owner or another insured person in his or her household is involved in an accident and is at fault for the accident. The insurance company can also raise the premium if an individual is convicted of certain moving traffic offenses, such as speeding, failing to stop for a traffic light, or failing to obey a stop sign. However, an insurance company may not increase a policyholder's premium just because a claim is made against the insured policyholder by another driver, a passenger, or a pedestrian.

If the driver is not at fault, the insurance company cannot use the accident as a reason to raise the premium. While the law permits an insurance company some leeway in deciding whether the policyholder was at fault, there are certain kinds of accidents that give rise to the presumption that the insured was not at fault. Such types of accidents include accidents where a parked vehicle is struck, accidents where a vehicle is struck from behind and the owner is not cited for a motor vehicle violation, accidents where only the other driver is convicted of a moving violation, accidents in which the vehicle owner is struck by a hit-and-run vehicle, accidents in which money compensation is recovered from the other driver, and accidents involving a collision with an animal.

When an insurance company increases a premium due to at-fault accidents or moving violation convictions, it must provide the insured with a detailed summary of how the premium increase was calculated and how long it will be imposed. An insurance company can cancel the insured's policy if the premiums are not paid or if the insured's driver's license or vehicle registration is suspended or revoked. Cancellation by the company is also justified by an insured's conviction for more than two moving traffic violations or for certain accidents in which the insured is at fault.

An insurance company may cancel a policy if the company discovers that false statements were made on the policy application or on any subsequent questionnaires. Failing to disclose a speeding ticket or a physical disability can lead to cancellation if the company discovers such an omission. However, an insured's innocent omission on an application or a questionnaire is not enough to support policy cancellation. The company must prove that the insured knew he or she was acting dishonestly and that the misrepresentation relates to an issue the company regularly considers when deciding whether to issue or renew a policy of insurance.

The law specifically prohibits insurance companies from canceling an insurance policy based on age, residence in a certain community, race, sex, or marital status. If a husband and wife are insured on the same policy, facts that justify canceling because of the conduct of one spouse do not entitle the company to cancel the entire policy. Instead, the company may cancel the coverage only for the spouse in question.

The insurance laws and administrative regulations are complex and provide procedures by which premium increases, cancellations, and refusals to renew can be challenged by insureds. Before considering any such challenge, the insured should secure and review all available information that the insurance company claims supports its decision.

The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.

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