Ways to Avoid Insurance Cancellation

If you find yourself in this unfortunate situation, it is important to let your Eldredge & Lumpkin customer service representative know as soon as possible. The sooner we learn of your problem, the better we can try to help you avoid policy cancellation. Once a cancellation is issued by the insurance company, our agency hands are likely to be tied.

Here’s why you should make every effort to avoid policy cancellation:

• Most companies will require payment in full to reinstate your policy, even if you have made good on other cancellations in the past. Some may require an initial surcharge for a new auto policy.
• If your policy is cancelled and has to be rewritten, you will lose all grandfathered benefits such as preferred credits
• If there is a lapse in coverage, you will also lose loyalty credits, which could take years of good payment history to recover
• Cancellation of your policy may affect your credit rating. Although Massachusetts does not allow insurance companies to use credit ratings for underwriting, some companies will raise your premium based on the number of times a cancellation notice was issued, your total days of lapsed coverage and your number of late payments. And policy cancellation will affect your credit rating.

How can you avoid cancellation?

• Keep an up-to-date record of your policies and effective dates. Renewal premiums or, at a minimum, first installments are due by the effective date
• Ask your E&L customer service representative for a schedule of payments if the insurance company does not provide one
• Pay as much of the bill as you can at a time of year when it is easiest for you to do so
• Pay online if it is more convenient.

What to watch for:

• Each company has its own cancellation procedures but in general, it’s a two-step process. First you’ll get a policy renewal bill (the FAIR Plan calls this an expiration notice). If payment has not been received by the effective date, you will be mailed an official cancellation notice.
• Some companies will send you a reminder notice prior to the effective date. This is becoming less common, however, due to mailing expenses and liability risk in the current legal climate.