It can come as an unwelcome surprise when your insurance company declines to pay your auto or home insurance claim. But there’s always at least one underlying reason. Don’t accidentally void your insurance policies and get caught uninsured. Here are some ways that could happen:
Auto insurance
Misrepresenting your driving record. If you’ve gotten speeding tickets or other citations, don’t try to hide them from your insurance company. When your past transgressions are discovered (and they will be discovered), your insurance company can invalidate your policy. That could wind up costing you a lot of money.
Failing to report an accident. Don’t keep your insurance company out of the loop if you get into an accident. You may think pretending it didn’t happen will keep your costs down, but it’s a bad idea. Even if another vehicle was at fault, not telling your insurance company can leave you and your insurer vulnerable to a lawsuit.
Failing to report vehicle modifications. Modifications to a vehicle can make it riskier from an insurer’s perspective. Your insurer may refuse to pay a claim if you haven’t properly disclosed the changes you’ve made.
Driving for a ridesharing service or making deliveries. Your personal insurance policy probably won’t cover accidents that happen while you’re driving your vehicle for commercial purposes. This includes carrying goods for pay or using your vehicle as a ridesharing service, unless you’ve added a commercial or ridesharing option to your policy.
Violating driving laws. Your auto insurer can deny a claim if you were driving illegally when the claim arose. Examples include driving while under the influence of drugs or alcohol and driving without a valid license.
Underestimating your mileage. If you drive to work every day and your office is 10 miles from home, that’s 20 miles a day and 100 miles a week in commuter mileage alone. But if you said on your insurance application that you drive 2,000 miles a year, that’s probably not even close to the truth. Falsely declaring a lower mileage than you actually drive result in premium increases or problems with claims. It could even invalidate your insurance altogether.
Providing an incorrect address. If you move out of your parents’ house or relocate across town, you must tell your insurance company. Where you live impacts the price of your coverage because crime rates, population density, and other factors vary by postal code. So, leaving your vehicle registered at your parents’ suburban address while living downtown could give the insurance company a legitimate reason to reject any claim you make.
Homeowners insurance
Operating a home-based business. If you haven’t informed your insurance company about your home-based business, any losses related to your business may not be covered under your homeowners policy.
Undisclosed home renovations. Depending on the extent of your renovations, your coverage could be voided if you don’t inform your insurance company. For example, if you add rooms and don’t inform your insurance company, those rooms may not be covered in the event of a claim.
Also, your policy likely excludes coverage for vandalism, water damage, and glass breakage for homes under construction. Therefore, you may need to arrange for special insurance to protect you during renovations.
The premium you pay for your homeowners policy is based on its condition when you bought the policy, and the estimated cost to reconstruct it should it be damaged or destroyed. Renovations generally increase the “replacement cost” of your home. This could expose you to serious financial loss in the event of a claim.
As a general rule, save receipts and inform your insurance broker about any changes to your property.
- Leaving your home vacant. Although you don’t need to check in with your insurer every time you go on vacation, you risk invalidating your coverage if you leave your home vacant for more than 30 days.
- Causing deliberate damage. Insurance companies take fraud seriously, and with good reason. You could invalidate your coverage and face civil or criminal penalties.
- Incurring a high number of claims. Policies that have an unusually high number of claims often come under increased scrutiny from insurance companies.
- Criminal activity. Participating in criminal activity at your residence is bad for all kinds of reasons. One of those reasons is your insurer can void your coverage. Just don’t do it.
- Renting a room to a tenant. Taking on a roommate or tenant can help defray some of the costs of homeownership, but remember to inform your insurer.
Reduce your risk
- Read the small print and understand exclusions.
- Tell the truth when applying for coverage or making claims.
- Update your information when life changes occur.
Insurance polices can be long and complicated, and you likely haven’t read all the fine print. That’s perfectly understandable, but you need to make sure you don’t unintentionally do anything to jeopardize your coverage.
If you have any questions about voiding your insurance policies, contact your insurance broker. They’ll be happy to answer your questions, explain your coverage in plain English and address any concerns.
Your Coverage Deserves a Second Look
Insurance shouldn’t leave you guessing. Whether it’s auto, home, or a life change on the horizon, having the right guidance can make all the difference.
Navacord’s trusted advisors work with leading insurers to help ensure your coverage stays accurate, compliant, and aligned with your life.
Talk to a Navacord insurance advisor today to review your policy and avoid costly surprises before a claim ever happens.
