Policyholders' Rights in Auto Insurance

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There is always a possibility that insurers take advantage of policyholders' failures to understand their rights and use their lack of knowledge for improper business conducts. There are at least 10 basic things policyholders or auto insurance applicants should be aware of as follows.

1. When an insurer denies an application, the company has the obligation to inform applicants about the reasons. Most states require a company to provide explanation about why an application does not go through for approval. Consumers have the rights to ask for review, corrections, and appeal.

2. Auto insurance companies cannot stop consumers from canceling their policies. Policyholders have the right to cancel the policies anytime, even when the policies are still active. Cancellation does not have to happen on renewal date either. Furthermore, the consumers earn the rights to get refund of any unused premium. Insurers have the rights to charge a penalty for early cancellation.

3. Policyholders can ask for an insurer to increase limit or change coverage anytime, not only on renewal date. For those who seek for lower premium, they can get refund, too.

4. An insurance company also has the right to cancel the policy anytime. However, the company must notice the policyholder about the unfortunate event. Notice of cancellation must include explanation.

5. There can be many reasons for denial. However, an insurer cannot deny application because another insurer has denied it before. This is not a valid reason; if the company has to cancel the application, the explanation should be clear and reasonable.

6. High-risk drivers can improve their records to earn a chance to apply for lower premium. They can revoke high-risk label from their names and apply for new policy. Just because a driver purchased non-standard insurance last year, it does not mean that the person cannot improve forever. Insurance companies cannot deny an application for that reason alone.

7. First time buyers may not realize that they can minimize expense if they purchase only the state minimum coverage requirement. No matter how big a company is, denial due to minimum purchase does not make sense.

8. Bad credit score often means higher premium, but it should never lead to instant cancellation. Auto insurance company should review the credit score and determine premium rate; although the rate is almost always higher than average, at least the applicant deserves the chance to get a valid proof insurance. Cancellation because of bad credit score is not acceptable.

9. Policyholders can pay premium in advance or installments. It is wrong for an insurance company that denies application because consumers ask for installments.

10. DMV records affect premium rate. Someone's record can list many things from minor violation ticket to involvement in major accidents that caused permanent injuries or deaths. In case an insurance company denies an application due to DMV records, the applicant has the right to know the details about which point of the record that leads to cancellation.

The ideal practice is that insurance company should be straightforward about an application and educative in the process. Every applicant needs concise explanation about price, payment methods, renewal, and cancellation.

Misinformation tends to cause major problems for consumers, agents, and insurers in latter days. Unclear policies and wrong explanations will confuse policyholders; mistakes in the process of renewal or claim are not always on consumers' parts. To avoid these issues, all parties who take part in the purchase (insurer, agent, and buyer) must stand on equal grounds and understand each other's interests.

Problems with High Risk Drivers

Most people understand that high-risk drivers are those who have records of DUI or major traffic violations. Insurance companies, on the other hand, have different perspectives. High-risk drivers are not only those with bad DMV records, but also drivers with no previous records at all; teenagers and everyone with fresh driver license fall into the category. High-risk drivers often face denial after denial from insurers, unless the companies are from non-standard market.

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Source by Mike Heuer

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