Insurance is an essential safeguard that protects us financially when unexpected events occur. However, it’s important to understand that insurance policies can be cancelled if certain conditions are not met. In Australia, both home insurance and auto insurance policies can be voided, leaving individuals exposed to significant risks.
This article explores the need to keep insurance up to date and highlights the various factors that can lead to policy cancellation. We will categorise the factors by home insurance and auto insurance and provide tips to prevent voiding policies.
Factors That Can Void Home Insurance
Failure to Pay Premiums
One of the most common reasons for the cancellation of home insurance policies is non-payment of premiums. If you fail to pay your premiums by the due date, the insurance company has the right to cancel your policy.
Tip: Set up automatic payments or reminders to ensure that your premiums are paid on time. A finance app can program your due dates on a calendar. If you’re facing financial difficulties, contact your insurer to discuss possible payment arrangements or alternative solutions.
Property Use and Occupancy
When the occupancy or use of your property changes significantly, it can affect your home insurance coverage. For example, if your property becomes vacant or is used for commercial purposes without notifying your insurance provider, they can scrap the policy.
Tip: Inform your insurance company about any changes in occupancy or use of the property to ensure that your coverage remains valid. Some insurers offer specific policies for vacant or rental properties that can address unique situations.
Failure to Disclose Relevant Information
Providing accurate and complete information is crucial when purchasing home insurance. Failure to disclose relevant details about your property, such as previous insurance claims, renovations, or property features, can result in the cancellation of your policy.
Tip: Be transparent and provide all necessary information when obtaining insurance. Take the time to review and update your policy annually to ensure that it reflects any changes in your property.
Maintenance and Safety Requirements
Insurance companies expect homeowners to properly maintain their properties and take precautions to prevent damage or accidents. Neglecting maintenance or failing to meet safety requirements can lead to policy cancellation. Examples include not maintaining fire alarms, failing to fix leaky pipes, or ignoring building code violations.
Tip: Regularly inspect your property, address maintenance issues promptly, and comply with safety standards. Implementing preventive measures can reduce the risk of damage and help maintain your insurance coverage. All documentation should be preserved to aid the underwriters.
Factors That Can Void Auto Insurance
Driving Violations and Licence Suspensions
Serious driving violations, such as driving under the influence, reckless driving, or repeated traffic offences, can result in the voiding of your auto insurance policy. Additionally, if your driver’s licence is suspended or revoked, your insurance company may cancel your coverage.
Tip: Drive responsibly, obey traffic laws, and maintain a clean driving record. If your licence is suspended, seek alternative transportation options or consider obtaining a non-owner insurance policy during the suspension period.
Non-Disclosure of Accurate Driving History
When applying for auto insurance, it is crucial to provide an accurate driving history. Failure to disclose past accidents, traffic violations, or licence suspensions can lead to policy cancellation. Insurance companies rely on this information to assess risk and determine premiums; some auto insurers might go as far as checking the National Exchange of Vehicle and Driver Information System (NEVDIS) during a background check of the applicant.
Tip: Be honest and provide complete information when applying for auto insurance. Review your driving record periodically and inform your insurer about any changes or updates.
Non-Payment of Premiums
Similar to home insurance, non-payment of auto insurance premiums can lead to policy cancellation. If you fail to pay your premiums within the specified timeframe, your insurance company may cancel your coverage.
Tip: Set up automatic payments or reminders to ensure timely payment of your auto insurance premiums. If you encounter financial difficulties, contact your insurer to explore possible payment arrangements or alternative solutions.
Vehicle Modifications and Misuse
Modifying your vehicle without notifying your insurance provider can result in policy cancellation. Certain modifications, such as engine upgrades, lift kits, or changes that increase the vehicle’s risk profile, even aftermarket parts, may not be covered by your policy. If the vehicle is already a high-performance model like a sports car, for example, it can be covered under increased premiums, but if the engine itself has some upgrades, a cancelled policy might be the outcome.
Additionally, using your vehicle for commercial purposes without the appropriate coverage can void your auto insurance. Misuse in particular, may even be traced to a lack of adequate maintenance; Canstar’s Tamika Seeto said worn-out tyres are safety and insurance risks, considering current road laws require tyre tread depths to be at least 1.5 millimetres.
Tip: Inform your insurance company about any modifications made to your vehicle to ensure that your coverage remains valid. Check your state or territory’s road laws to identify which car modifications are approved for installation.
If you plan to use your vehicle for commercial purposes, discuss the necessary coverage options with your insurer.
Conclusion
Keeping your insurance up to date is crucial to ensure adequate protection and financial security. Whether it’s home insurance or auto insurance, understanding the factors that can cancel your policy is essential. By paying premiums on time, accurately disclosing information, maintaining your property, driving responsibly, and notifying your insurance company of any changes, you can prevent policy cancellation and maintain the coverage you need.
DISCLAIMER: This article is for informational purposes only and does not constitute official insurance advice. 2 Ezi has no working relationships with any company or organisation mentioned. Please review your policy and consult your insurer immediately.
