Insurance Refusals, Cancellations And Voided Policies
Here, we’ll explain why insurance refusals, cancelled and voided policies can occur.
Insurance refusal is where an insurer declines to cover you.
An insurer can declare a policy null and void.
A voided insurance policy means it is completely erased as if it never existed.
The insurer must notify you in writing that they’re cancelling or voiding a policy.
Cancelled and voided policies can make it harder to get coverage and may result in higher premiums.
What does having insurance refused mean?
Insurance refusal occurs when an insurer declines to give you the requested coverage.
Believe it or not, insurers can refuse to cover you for many reasons. However, the insurance industry is heavily regulated, so insurers cannot refuse to give a policy on unreasonable grounds.
Why would an insurance company refuse to insure me?
Usually, there is a practical reason behind an insurance refusal. It’s relatively uncommon for a policy to be refused, but it can happen depending on circumstances.
As long as their decision adheres to anti-discrimination legislation, it is legal for an insurer to refuse a customer a policy.
An insurer may refuse to insure you due to:
A history of high claims.
Occupation-related risks that require a more specialist policy.
Non-compliance with their eligibility criteria.
If they believe you present an unacceptable level of risk.
In what circumstances can I be refused insurance?
You can be refused insurance if you pose a high risk to the insurer, have a history of making numerous claims, or do not meet the insurer’s underwriting criteria.
What does it mean if an insurance policy is voided?
An insurance policy can be declared null and void as if it never existed. This means that the policy is considered invalid and provides no coverage or benefits.
When is an insurance policy voided?
Similarly to a cancellation, the decision to void an insurance is not taken lightly. There will always be a valid reason why an insurer decides a policy must be null and void.
An insurer can void a policy due to:
Misleading, false information provided by a policyholder during the application or claims process. To use car insurance as an example, this could be a policyholder using another residential address to get a cheaper premium.
A policyholder withholding information that would affect an insurer’s decision to cover them. For example, travel insurance could become void if the policyholder does not disclose a medical condition that an insurer can’t cover.
Policy misuse, which is occurs when the policyholder breaches their cover’s specific conditions. A good example of this would be a motor trader or courier using a personal auto insurance policy for a professional vehicle that would require commercial van insurance or road-risk cover.
What is the difference between voided and cancelled insurance?
The difference between a cancelled and a voided insurance policy is that the latter is completely erased as if it never existed.
Once a policy is void, it is erased from the start and nullified. This means the policyholder will have no cover as soon as a policy is void.
While a cancelled insurance policy means the cover has been terminated with prior notice and under the policy terms.
For example, cancellation may occur due to non-payment or at a policyholder’s request, but this doesn’t negate the coverage provided up to that point.
Why would an insurance company void a policy?
It is often due to actions by the policyholder that are considered fraudulent or in violation of policy terms.
An insurance company can void a policy if it determines that such circumstances exist, and this is usually done to protect the insurer’s interests and maintain the integrity of the insurance system.
How long does voided insurance stay on record?
The length of time insurance stays on record will vary. Retaining records depends on the insurer and why the policy was cancelled or voided. To find out the specific record retention for your insurer, you can find this in their privacy notice.
Since a voided or cancelled policy are both higher risks, you must always declare if you’ve had them in the past. Insurance providers may view it as a red flag, making it difficult for you to secure coverage or result in higher premiums.
What happens if an insurance company cancels your policy?
First, the insurer must notify you in writing that they’re cancelling a policy. This correspondence outlines the reasons for the cancellation and the effective date. They usually give you a reasonable notice period, which allows you time to find alternative coverage.
Depending on the circumstances of the cancellation, if there are outstanding premiums or fees, you may be required to pay those before the cancellation is finalised.
The most immediate consequence of a cancellation is the loss of insurance coverage. You will no longer be protected by the policy, and any claims or incidents that occur after the cancellation date cannot be covered.
When applying for insurance in the future, you may be required to disclose any previous cancellations. Cancelling a policy can affect your future ability to secure insurance coverage and may result in higher premiums. Some insurers may view policy cancellations as a risk factor, which could impact your future insurability.
How can I get insured after a cancelled or voided policy?
Whether your insurance application gets approved depends on many factors and circumstances. For those who have had a policy voided, cancelled or refused, the thought of reapplying for insurance may be nerve-wracking.
Don’t worry, we’re happy to help guide you through every step of the application process and find insurers that may accept your application.If you need advice on insurance after a cancellation or voided policy, call our experts on 08003777390.
CII-certified Charlotte is our expert on all things insurance and compliance. After embarking upon her insurance career in a policy retention role, she continued expanding her insurance knowledge in customer service and renewal roles. Since 2015, Charlotte has focused on compliance-based roles and joined the One Sure team in 2016. Achieving good outcomes for customers and improving the business is at the heart of all she does. In 2019, The Insurance Institute of Stoke-On-Trent recognised her expertise by awarding her with the Young Achiever Of The Year Award. Her specialisms include property insurance and insurance fraud.
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