If Your Automobile Insurance Policy Is Canceled
Note: This information was developed to provide consumers with general information and guidance about insurance coverages and laws. It is not intended to provide a formal, definitive description or interpretation of Department policy. For specific Department policy on any issue, regulated entities (insurance industry) and interested parties should contact the Department.
If your automobile insurance company terminates your policy without your permission, your company has certain duties and you have certain rights. A company may terminate a policy without your permission in three ways:
- rescission — when the company voids your policy back to the beginning. There is no coverage at all and the company will return the money you paid;
- cancellation — when the company terminates your policy before the expiration date;
- nonrenewal — when the company terminates your policy at the expiration date.
A company’s duties and your rights differ depending on whether your policy is rescinded, canceled or nonrenewed. This fact sheet explains what happens when your policy is being canceled before its expiration date.
Reason for Cancellation
During the first 60 days of a new policy, your company may cancel for almost any reason. Illinois law allows companies 60 days to look at your risk and decide whether they want to issue you a policy.
If a check, credit card charge, or money order given for the initial premium payment is not processed due to insufficient funds, the new policy may be considered null and void and cancellation provisions will not apply.
After your new policy has been in force more than 60 days, or if you have a renewal policy, your company may only cancel you for one of the following reasons:
If at any time:
- you fail to pay the premium by the due date;
- you obtained the policy through misrepresentation or fraud;
- anyone insured on the policy violated the terms or conditions of the policy;
- you failed to disclose fully your motor vehicle accidents and moving traffic violations for the preceding 36 months if called for in the application;
- anyone insured on the policy made a false or fraudulent claim or knowingly helped someone else make a false or fraudulent claim;
- you or anyone who lives in your household or customarily uses your vehicle:
- has had their driver’s license suspended or revoked in the past 12 months;
- is or becomes subject to epilepsy or heart attacks, and cannot produce a physician’s certificate attesting to their unqualified ability to operate a motor vehicle safely;
- has an accident record, conviction record (criminal or traffic), or physical or mental condition that might endanger the public safety if they operate an automobile.
If at any time the insured vehicle:
- is so mechanically defective that its operation might endanger public safety;
- is used in carrying passengers for hire or compensation (the use of an auto for a car pool shall not be considered use of an auto for hire or compensation);
- is used in the business of transportation of flammables or explosives, or is an authorized emergency vehicle;
- has changed in shape or condition during the policy period so as to increase the risk substantially; or
- is subject to an inspection law and has not been inspected, or if inspected, has failed to qualify.
If, within the past 36 months:
- you, or anyone who lives with you or customarily uses your auto, has been addicted to the use of narcotics or other drugs;
- you, or anyone who lives with you or customarily uses your auto, has been convicted of or forfeited bail for:
- any felony;
- criminal negligence resulting in death, homicide or assault arising out of the operation of a motor vehicle;
- operating a motor vehicle while intoxicated or under the influence of drugs;
- intoxication while in, or about, an automobile or while having custody of an automobile;
- leaving the scene of an accident without stopping to report it or for theft or unlawful taking of a motor vehicle;
- making false statements in an application for an operator’s or chauffeur’s license.
Effective January 1, 2003, an insurer is prohibited from canceling your automobile policy solely on the basis that one or more claims have been made against any policy during the preceding 60 months for a loss that is the result of a hate crime committed against the person or property insured if the insured provides evidence to the insurer that the act causing the loss is identified as a hate crime on a police report.
The company must send you a written notice explaining why it is canceling your policy. The notice must also explain two important items:
- You have the right to appeal the cancellation as explained below under Hearing Rights.
- You may be eligible to buy insurance from the Illinois Automobile Insurance Plan if you cannot find coverage elsewhere.
The company must send a cancellation notice to you at your last known mailing address, so it is important for you to notify your insurance agent or company if you move. The company must mail your cancellation notice:
- at least 10 days before the cancellation date for nonpayment of premium;
- at least 30 days before the cancellation date for all other reasons.
The company must keep proof that it mailed your notice, but it does not have to show proof that you received it.
If you believe your company failed to follow the required steps when canceling your policy, you may appeal the cancellation to the Director of Insurance. To do so, you must:
- have been canceled for a reason other than nonpayment of premium;
- mail or deliver your written request for a hearing to the Department of Insurance at least 20 days before the cancellation date, explaining in detail why you believe the company has improperly canceled your policy.
For More Information
Call our Consumer Assistance Hotline toll free at (866) 445-5364 or visit us on our website at http://insurance.illinois.gov