What It Looks Like When a Commercial Insurance Cancellation Is Coming & What to Do About It

Last week we looked at the reasons why your dealership commercial insurance may be canceled. Obviously your business never wants to be in this position but it’s important to understand what the process looks like and how you can avoid it from happening.

An insurer that is preparing to cancel your commercial insurance policy will typically go through 3 steps to alert you that the policy will be deactivated soon:

1. Notice Period: Most insurance companies are required to give you notice before moving forward with the cancellation of the policy which is typically 30 days in most cases. This should give your dealership enough time to rectify any issues or even find alternative coverage if your current policy is beyond saving.

2. Reason for Cancellation: Your insurer must provide a reason for the cancellation in the notice they send and citing the specific conditions that were violated. You have the right to know what has happened.

3. Return of Premium: Depending on the reason for cancellation and the terms of your specific policy, your insurer may be obligated to refund a portion of your paid premium. It may not be much depending on when it was paid.

Assuming that you have been notified that the cancellation is coming, there may be a few things you can do to potentially fix the situation before it gets to that point.

Here are a few steps you can take to save the policy (no guarantee but it’s worth a shot) - 

1. Contact Your Insurer Immediately: You may think it’s a done deal but it can’t hurt to reach out and see if there is anything that can be done to save the coverage. If it’s a payment issue, can a payment be done immediately to save the situation? Communicate  with the insurance company to understand better what has happened and explore options to fix the issue if it’s possible.

2. Rectify Issues: Take whatever necessary steps you can to address the concerns raised by your insurer. Maybe this involves catching up on payments, disclosing new security measures, or compliance issues that can be quickly remedied. 

3. Find Alternative Coverage, Fast: You don’t want to be without your commercial coverage for even a day and if cancellation with your current insurer is unavoidable, start looking for a new insurance provider as soon as possible. 

Here’s a quick refresher on how to make sure your business is never in this position to begin with - 

• Communication is Key - Always keep your insurer informed about any changes to your business operations or any new risks that may be coming in the future. Never let those surprises be the reason you get canceled. 

• Make Your Payments On Time - Ask if an automatic premium payment option is available if there are any concerns in this area.

• Always Provide Accurate Information - Providing accurate information and more importantly, honest information to your insurer for the initial application helps to prevent any surprises later that can be used as a reason to cancel your coverage. Misrepresentation will haunt you every time.

• Manage Risk Properly - Implementing good security measures, maintaining a solid claims history, adhering to all local/state/Federal regulations all work together to help present your business as a good ‘risk’ from an insurance perspective.

If the worst case scenario happens to your dealership and you need to pivot quickly for your commercial insurance coverage, contact us here at DealerSure. We have the most comprehensive plans available backed by some of the best insurers in the business.