I’ve mentioned before that a discount is offered for riders that have “prior insurance”. Yes, in large part motorcycle insurance is seasonal, however most insurers offer only a year term, understanding the vehicle will not be used in winter. Pricing is set taking this into account. Mature riders with a few bikes and good driving record find no significant savings to cancel policies during the off-season and restart in the spring. Folks with large collections, poor driving records, and young operators on sport bikes may come out ahead on price to cancel their insurance during the off season. For many, our motorcycle is a small part of our overall insurance costs. The ramifications of a lapse in your regular auto, home or business insurance can be much more severe.
A recent caller needed insurance for a business property and there were some complications. First, the property had been uninsured for several months after a dispute with his former insurance agent. Second – after a divorce our customer was not the owner of the property. His ex-wife was the controlling owner of the LLC owning the property. Third – the commercial property is for sale, and currently un-occupied. And Last – it appeared the ex-wife whom was responsible for paying insurance on the location was not doing so. The customer attempted to split coverage on this location from a larger commercial insurance policy covering several locations and the business operations. The agent advised they couldn’t do this; the customer got miffed and cancelled coverage.
We had another case of a gentleman whose home insurance was set to non-renew in five days due to multiple claims. There were concerns over the condition of the property, so we inspected and discovered the roof was in poor condition. We let the guy know we’d check on options and two days before the policy was set to cancel he let us know his insurance agent was reviewing and trying to get the non-renewal reversed so he didn’t need a quote from us any longer. Exactly 7 days AFTER the scheduled non-renewal date, the guy called back and wanted to know what we’d found to insure his home. The former agent was not able to get the decision reversed, we were not notified and he’s been uninsured for a week.
So now I’m faced with a very difficult situation. Both of these customers have hard to place properties, no prior insurance, and I’m scrambling to find coverage for them as quickly as possible. In both cases if they’d given us more time we might have found more favorable solutions.
Why do insurers care about continuous insurance? Insurance companies study claims stats to predict which customers are more likely to have a claim. Many factors go into that prediction – age, driving record – and insurers have found that customers that keep insurance in place have fewer insurance claims. There is also a concern about pre-existing damage. If you’ve let insurance lapse and then report damage to your home or vehicle, the insurance company must investigate – did this damage occur before the current policy became effective? This can be a particularly difficult problem for roof damage. We generally can’t inspect our roofs after every storm. We find a roof issue when we find shingles blown around the yard or experience a leak inside the property. The initial damage from wind or hail storm could have been caused weeks or months before you’re aware it has occurred
I found a study on auto insurance rates that indicated a lapse in insurance coverage of up to 30 days generally results in an increase of about 8% in rate. If your auto policy lapses over 30 days, that increase jumps to 29%.
Eligibility is also a concern. Some auto and home insurers will not insure anyone who has not had at least 6 months of prior coverage (one year for homes) except for first time purchases. This means when your policy cancels you may be looking for insurance coverage with a high risk/standard insurance company. These policies are more expensive AND provide lesser coverage than a preferred policy.
Non-payment is the most common reason for a cancellation. Insurers are required to notify you before a policy cancels, so don’t ignore billing and reminder notices. If your policy does cancel, call immediately to see if you’re eligible to reinstate. You may be required to sign a statement that you’ve not experienced any damage but generally your pricing will remain the same
Insurance companies can also cancel your policy for a number of other reasons: multiple claims, failed to cooperate with a claim investigate, misstated facts on application, or the condition of your property does not meet basic eligibility guidelines. If you receive a notice of cancellation do not ignore it! There may be an option to remain with your current company. For example, we’ve been able to continue coverage for a non-renewed customer by having them agree to a higher deductible or add a railing to a porch that was missing. It may also be a simple error you can correct with some information. If you can’t keep your current policy, confirm exactly why and look for other options immediately. When checking with other companies, clearly advise WHY you have been cancelled or non-renewed. If one company has a problem with your situation, others may too, so it’s best to address it up front. It’s far worse to have a claims or property condition issue AND no prior insurance.
We always want to help – but YOU can help yourself by not letting your insurance lapse, seeking new coverage before cancelling a policy, and giving your new agent or company as much time as possible to find the best solution for your insurance challenges.
Karen Diehl operates Diehl Insurance with husband Eric. They agency specializes in motorcycle insurance for motorcycles and collector cars in Ohio, Kentucky and Indiana.
