For many motorists, the world of auto insurance coverage begins and ends with the search for a suitable policy and a subsequent purchase. Although most road users have a firm understanding of the basic components that are included within an auto insurance policy, there are still several different situations that can arise which might not be so clearly defined.
Problems that arise when Changing Auto Insurance Companies
There can be any number of reasons why a motorist would want to switch auto insurance companies. Moving to a different state, changing vehicles or simply being dissatisfied with the service you are receiving from your current auto insurance provider can all be valid reasons for choosing to change your carrier.
Most auto insurance companies will allow you to cancel coverage by providing a letter of cancellation. It is important to note that an existing auto insurance policy may not be automatically cancelled once the policy term has expired. Indeed, many companies clearly state that a coverage period will be continuous unless the policyholder declares otherwise. Simply refusing to pay any financial obligations on an existing auto insurance policy may see an adverse entry made on the credit file of the registered vehicle owner. The auto insurance company will not always be particularly proactive in informing you of how policy cancellations are carried out so it is the express responsibility of the policyholder to understand how things work.
If an auto insurance company simply doesn’t receive payments on an ongoing policy, the local Department of Motor Vehicles will be contacted and this could ultimately lead to difficulty in obtaining auto insurance coverage in the future.