Why is there a cancellation notice on my auto insurance bill?

     You’ve been making all of your auto insurance payments on time. And surprisingly, when the next bill comes in the mail, you see that there is an “Intent to Cancel Notice” or “Notice of Cancellation” (or something similar) included on your bill…. What’s going on?!
 
     I used to get calls like this from worried customers every once in a while. But recently, it happens a lot more often. In the past people were likely to get these notices after making a payment that was a day or two late, after the notices were already mailed out….
 
   But now, people who always pay on time are also getting these cancellation notices…. The terminology used on many of these cancellation notices use complicated lawyer lingo that most people don’t understand. This sometimes causes people to freak out and wonder what is going on….
 
No Worries. Relax!
 
     The auto insurance companies only do this to comply with state laws. Let me explain…
 
   In most states, there are laws regarding the procedure a company must take before they can cancel a policy for non-payment of premium. Before a company can cancel a policy for non-payment, they must first send out a cancellation notice via U.S. mail. Auto insurance companies go about complying with that law in one of two ways:
 
1. Many companies will mail out a cancellation notice the next business day after the policy is a day or two late on a payment. This notice explains that if the payment isn’t made by such and such date, the policy will cancel.
 
2. Other companies will simply include a cancellation notice on the regular bill itself, so that no other mail needs to be sent out if payment isn’t made on time…. More and more companies are switching to this option because it saves them a significant amount of money versus waiting on a payment to become late and having to mail out another letter. This is what’s causing the confusion.
 
So don’t be alarmed if you’re paying your policy on time and see one of these cancellation notices.
 
 
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