Pennsylvania Auto Insurance Cancellation Policies: Understanding Your Rights

In Pennsylvania, you can cancel your auto insurance at any time, but you should be aware of your provider's cancellation policy to avoid unnecessary fees and to ensure you receive any refunds you are owed. Most insurance companies will require you to give proper notice, usually 15 or 30 days, and you may incur a small cancellation fee. It is also important to maintain auto insurance coverage to avoid fines and increased premiums.

Pennsylvania auto insurance cancellation policy requirements

When it comes to cancellation policies, insurance companies in Pennsylvania may cancel a policy for various reasons. Non-payment of premiums is a common reason for cancellation, as insurance providers may terminate coverage if the policyholder fails to make timely payments. Another reason for cancellation could be license suspension or revocation. If a driver's license is suspended or revoked, the insurance company may choose to cancel their policy.

Fraudulent claims can also lead to policy termination. If a policyholder is found to have filed false or exaggerated claims, the insurance company reserves the right to cancel their coverage. Additionally, having too many accidents on record could make an individual too risky to insure, resulting in policy cancellation. Lastly, if a policy does not meet the state's minimum coverage requirements, the insurance company may cancel it to ensure compliance with Pennsylvania law.

It is important to note that if your auto insurance policy is canceled in Pennsylvania, you must stop driving immediately and obtain a new policy. Driving without insurance in Pennsylvania is illegal and can result in penalties, including fines, suspension of vehicle registration, and driver's license suspension. The Pennsylvania DMV is notified electronically of insurance status, so it is crucial to maintain active coverage to avoid legal consequences.

Reasons for cancellation

Pennsylvania's auto insurance cancellation policies are outlined in the Pennsylvania Bulletin Pennsylvania Code, which details the requirements for insurers to cancel or refuse to renew policies. While the Code does not provide specific reasons for cancellation, it does outline the procedures that insurers must follow when cancelling or refusing to renew a policy. These procedures include providing clear and complete reasons for cancellation and allowing the insured to request a review of the insurer's decision.

Although the Code does not specify reasons for cancellation, there are several common reasons why car insurance may be cancelled, as outlined below:

Non-payment of Premiums

Insurers can cancel a policy if the insured fails to pay the premium on time. This is one of the most common reasons for cancellation and typically requires advance notification of at least 10 days.

Misrepresentation or Fraud

Insurers may cancel a policy if the insured provides false or misleading information on their application or during the claims process. This includes failing to disclose necessary information such as the vehicle's garaging address or driving history.

License or Registration Issues

If the insured or a regular driver on the policy has their driver's license or vehicle registration revoked or suspended, the insurer may cancel the policy. This is especially true if the issue occurs within a specified period before the notice of cancellation, typically 36 months.

Medical Conditions

Insurers may cancel a policy if the insured or a regular driver has a medical condition, such as epilepsy or heart attacks, that affects their ability to drive safely. A certificate from a physician testifying to the individual's ability to drive may be required to avoid cancellation.

DUI, DWI, or OUI Conviction

If the insured or a regular driver on the policy is convicted of driving under the influence, the insurer may cancel the policy due to the increased risk. On average, rates increase by 70% after a DUI conviction.

Unsafe Vehicle

Insurers may cancel a policy if the insured vehicle has mechanical problems or fails to meet state inspection requirements, posing a danger to public safety.

Business Use

Personal car insurance policies typically do not cover business use of the vehicle. If the insured uses their car for business purposes, such as visiting job sites or making deliveries, the insurer may cancel the policy.

Ridesharing

If the insured uses their vehicle for ridesharing services like Uber or Lyft without informing their insurer, the policy may be cancelled. Personal car insurance policies do not typically cover ridesharing activities.

Other Reasons

In addition to the reasons mentioned above, insurers may cancel a policy for various other reasons, including but not limited to:

• Policy violations
• Failure to disclose accidents, traffic violations, or claims
• False or fraudulent claims
• Changes to the vehicle that increase risk
• Failure to maintain required memberships
• Financial instability of the insurer

Appeal procedures

If you receive a notice of cancellation or refusal to renew your auto insurance in Pennsylvania, you have the right to request a review of the insurer's action by the Insurance Commissioner. This review can be requested by signing a copy of the "Notice of Cancellation or Refusal to Renew" and sending it to one of the regional offices of the Insurance Department at one of the addresses given on the notice.

Upon receipt of such a request, both the insured and the insurer will be notified that an investigation has been initiated, and they may be contacted to provide additional information. Once the investigation is complete, a copy of the investigative report will be provided to both parties. Within ten days of receiving the report, either party can submit written comments for consideration by the Insurance Commissioner.

If either the insurer or the insured requests a formal administrative hearing, it will be scheduled as soon as possible. If a hearing is not requested, the matter will be decided based on the written comments and the investigative report.

Hearings will be recorded and transcribed, and all relevant evidence will be admitted. After the hearing or upon receipt of the written comments, the Insurance Commissioner will issue an order based on their findings.

Consumer-friendly statutes

In Pennsylvania, consumers are protected by a set of statutes that govern the cancellation and refusal to renew insurance policies. These statutes, outlined in Chapter 59 of the Pennsylvania Code, provide detailed guidelines for both insurers and insured individuals to ensure fair and transparent practices.

Notice Requirements:

The statutes mandate that notices of cancellation or refusal to renew must be clearly labelled and provided to the insured in duplicate. The date of cancellation or non-renewal must be at least 30 days after the notice is delivered or mailed, giving individuals time to seek alternative coverage. Insurers are required to specify the reasons for their decision and provide clear and complete information. This includes detailing any issues, such as material misrepresentation, fraudulent statements, or non-payment of premiums.

Appeal Procedures:

Consumers have the right to request a review of the insurer's decision by the Insurance Commissioner. This can be initiated by signing and sending the "Notice of Cancellation or Refusal to Renew" form to one of the regional offices of the Insurance Department. Upon receiving the request, the Commissioner's office will notify both the insured and the insurer, potentially seeking additional information. A copy of the investigative report will be provided to both parties, and they may submit written comments for consideration. If desired, a formal administrative hearing can be requested, following which the Insurance Commissioner will issue an order based on the findings.

Record-Keeping:

Insurers are required to maintain records of cancellations, refusals to renew, and complaints. These records must include the reasons for such decisions and be made available to the Insurance Commissioner upon request. This ensures transparency and accountability on the part of insurers.

Foreign Language Requirement:

In cases where the insurer or agent is aware that the policyholder cannot read the notice in English, they are obligated to provide the notice in an appropriate foreign language equivalent or oral communication in a language the policyholder understands. This ensures that all individuals can understand their rights and take appropriate actions.

Cancellation fees and refunds

You can cancel your auto insurance at any time, but you should check your provider's cancellation policy to avoid paying unnecessary fees and to get any refunds you're owed. Most insurance companies will refund you for any premiums you've paid in advance, and you might also receive a prorated refund on your current premium. However, cancellation fees will usually eat into this money, especially if you've only recently bought the policy. These fees are typically nominal, around $50 or a small percentage of your final premium.

If you're switching to a new provider, it's worth considering whether it makes financial sense to wait until the end of your current policy term to avoid these fees. However, if you're going to save a significant amount with your new policy, it might be worth switching even with the fee.

To cancel your auto insurance, you'll usually need to give proper notice, which for some companies means 15 or 30 days. Your new auto insurance provider may be able to cancel your previous insurance for you, but they might charge a cancellation fee or not reimburse you for your unused premium. If you're switching providers, your current company might try to keep you by identifying auto insurance discounts or other ways to save on your premiums.

If you're not switching providers, you'll need to contact your insurance agent yourself, usually by phone or written notice, and you'll likely have to fill out some paperwork. Remember to send your former insurer proof of your new auto insurance policy to avoid a lapse in coverage, which can result in fines and increased premiums.

Frequently asked questions