Auto insurance is vital in owning a vehicle, providing vehicle owners with financial protection and peace of mind. However, there are some instances where insurance companies may be able to void or deny your insurance policy, leaving you on the hook for possibly hundreds if not thousands of dollars. It’s important for vehicle owners to know of these circumstances, to avoid ending up having their claim denied. We will explore some of these situations that could lead to your insurance coverage being voided.
1.) Non-Payment of Premiums:
One of the simplest reasons why your insurance policy may be voided is not paying your premiums on time or within the grace period provided by your insurance company. It is important for vehicle owners to ensure they are aware of their payment schedule to avoid missing payments, especially if they are on a monthly payment plan.
2.) Unauthorized Use of your Vehicle:
It is important to be honest with your insurance company about how your vehicle will be used and for what purpose. Most insurance companies will ask you when you get a policy whether you’re insuring your vehicle for personal or business use. It may seem like it’s not a big deal to say personal use when, in fact, you are using it for business purposes to save money on premiums. However, this can have dire consequences, as your claim may be denied if you were to get in an accident for lying to your insurance company or even if you didn’t intend to lie but provided information that would exclude you from the coverage by the policy. If you are in an at-fault accident, this would mean you would be potentially personally responsible for the costs related to your injuries, third-party lawsuits, and any damage to your vehicle.
3.) Misrepresenting who the Primary Driver is:
Auto insurance companies consider various factors when determining premiums, with a significant factor being the driving history of the primary driver. Therefore, it is common to hear about many people, especially parents, listing themselves as primary drivers while their children drive the vehicle most of the time. This scheme may save some money in premiums in the short term but allows insurance companies to void your policy. This is considered “fronting” by insurance companies, and it will not only get your policy voided, but you may also face criminal charges for fraud.
Also, you risk having your policy cancelled if you do not disclose to the insurance company all the people in your house who will be driving the car. Ex. Not informing the insurance company that your children who live with you, will also be driving the car. Insurance agreements are considered “good faith” contracts, meaning you have a duty to be honest with your insurance and notify them of any material changes that occur.
4.) Drunk Driving:
There are many consequences for getting in an accident while driving drunk or impaired, including from your insurance company. One such consequence is that your Section C coverage, which is the optional coverage that covers any property damage, will be voided. This is because the auto policy in Alberta has an exclusion clause that allows insurance company to deny this coverage if you are convicted of driving under the influence, or if you are “incapable of proper control” of the vehicle due to the influence of drugs or alcohol. Further, your insurance company can deny you disability benefits from the Section B portion of your auto policy. These are the benefits that would normally pay you a weekly amount if you were unable to work due to injuries from an accident. Section B does have many more coverage benefits including cost of phsyiotherapy, chiropractic treatments and psychological rehabilitation and treatments. For more on Section B benefits please refer to our previous blog.
It is important to note that the insurance company can not deny the third-party liability coverage of a person found to be drunk or impaired at the time of an accident. This means victims of an accident can still sue the drunk driver and recover their losses. Lastly, if you do get an impaired driving conviction on your record, it will be extremely challenging finding an insurance company that provides full comprehensive coverage and you can also expect your insurance premiums to at least double.
In conclusion, it is important to be aware of situations that may result in you losing your insurance coverage, so you can avoid making those mistakes. Finding another insurance company to insure you may be difficult and pricey if you end up getting your policy voided for any reason. It is vital that you are always as honest and upfront as possible with your insurance company; that way, you have complete financial protection and peace of mind if you are ever in an accident.