When you buy a car insurance policy, you are effectively entering into a contract with the insurance provider. As with any contract, either you or the insurer can terminate the contract if there are genuine reasons for cancelling the car insurance policy. However, your insurer must notify you in writing if your policy is being cancelled. Also, if you haven’t been told the reason for cancelling the policy, you should ask your insurer.
In the instance that your policy is cancelled, you may need to buy another policy to make sure you’re not driving without insurance. This can be the case if you’ve opted to buy the compulsory third-party (CTP) insurance separately from your registration, and it’s part of the policy being cancelled. In such circumstances, you’ll also need to update your car registration after buying the new car insurance policy.
When can a car insurance company cancel my policy?
You may have your car insurance cancelled due to non-payment of the premium over some time, although missing a single payment may not result in cancellation of your policy. Consider checking if you have set up a direct debit for your premium payments which need to be updated or changed to another account. If you’re facing financial difficulties and unable to pay monthly premium instalments, you can talk to the insurer and see how to lower your premium. Alternatively, you can switch to another insurer offering a cheaper policy.
Another reason your insurance provider might cancel your policy is when your circumstances have changed significantly to make offering you insurance 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 can be cancelled after an accident which you failed to report to the insurance provider. If you believe your policy was incorrectly cancelled, you can file a complaint with the Australian Financial Complaints Authority (AFCA).
You should remember that your insurer cancelling your policy is not the same as the policy being declared void. Insurance providers may declare a policy void when you file a fraudulent claim, such as buying insurance for a car that you primarily drive in someone else’s name. 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.
What are my options if my car insurance renewal is declined?
If your insurer does not wish to continue providing you car insurance, denying a renewal is possibly the easier way of doing it. This can happen for various reasons, for instance, when you turn 26 and become eligible for cheaper insurance rates, or if you’ve filed too many insurance claims. You can try to find out why your renewal is 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 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, worse, uninsured. Consider checking the coverage your car insurance policy offered before purchasing a new policy, especially if your insurance policy includes CTP insurance. 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.