Insurance Policy Cancellation

Insured persons in Weatherford, Mineral Wells, Aledo, Azle, Springtown, Hudson Oaks, Willow Park, Brock, Millsap, and other places in Parker County may have a situation arise where a policy of insurance they have is cancelled. A natural question at times may be – How does that work?
To find out about the procedures for policy cancellation, a person can seek several sources for an answer.
1) Get the insurance agent who sold the policy to explain. The problem with this answer is that sometimes the agent may have made a mistake or may have reasons to not be completely honest with his answers or explanations.
2) Check with an experienced Insurance Law Attorney. Most attorneys who handle many insurance disputes is going to run across situations where an insurance company claims a policy has been cancelled and an investigation shows that the cancellation was improper and unwarranted and the cancellation is being used as a reason for not paying a proper claim.
3) Check with the Texas Department of Insurance website. Their website contains lots of insurance information and can either answer or give guidance to a lot of questions. If someone feels like they should file a complaint, the website has information for filing a complaint. This writer would suggest that if you have reached a point with your concerns such that you feel filing a complaint is necessary, then you also need to have an Insurance Law Attorney involved. You would not want something put into a complaint to be something that ends up hurting your rights.
4) The Texas Insurance Code has sections devoted to the proper procedures insurance companies must follow in canceling the various types of insurance policies that are written and in circulation.
5) The policy itself will often have within itself, the procedures they should follow in canceling the policy.
6) Speak with someone at the insurance company. Hear what they have to say. But, still follow up with an attorney.
The Texas Insurance Code, Section 551.103 says that cancellation of an insurance policy occurs when the policy is cancelled without the consent of the insured. This means coverage has terminated and the insurance company refuses to to provide additional coverage to which their customer is entitled under the policy.
Reasons an insurance company can cancel a policy are discussed in Section 551.104. This section says a policy can be cancelled for (1) non-payment of premiums, (2) submission of a fraudulent claim, or (3) the Texas Department of Insurance determines it is necessary.
Other reasons stated in that section include:
1) There is an increase in the hazard covered by the policy that is within the control of the insured and would produce an increase in the premium rate of the policy.
2) If the driver’s license or motor vehicle registration of the named insured or any other motor vehicle operator who resides in the same household as the named insured is suspended or revoked.
3) The insurance company can cancel an auto policy effective on any 12 month anniversary of the original effective date of the policy if notice of cancellation is mailed not later than the 30th day before the effective cancellation date.
4) The insurance company may cancel any insurance policy other than an auto policy or homeowners policy if the policy has been in effect less than 90 days.
5) An auto policy can be cancelled if it has been in effect less than 60 days.
6) A homeowners policy can be cancelled if it has been in effect less than 60 days and the insurance company identifies a condition that creates an increased risk of hazard that was not disclosed in the application for insurance coverage and is not the subject of a prior claim; or, before the effective date of the policy, the insurance company does not accept a copy of a required inspection report (there are other conditions to this part) and is dated not later than the 90th day before the effective date of the policy.
There are several other statutes dealing with cancellation of insurance policies.
What needs to be taken from this writing is that when an insurance company cancels a policy, they may not have a legally recognized right of making the cancellation and they may have not followed the proper procedures.
Many times violations of the above will not make a difference, but if a person has a claim and the claim is being denied because of cancellation issues, it becomes very important to check and see if proper procedures were being followed.