What happened?
When San Diego resident Sergio Preciado caused a fender bender last July, he expected his car insurance to come to the rescue.
He admitted fault in the incident and exchanged information with the other driver. He thought the matter was resolved after that.
However, a shocking twist unfolded when an insurance adjuster from his insurance company, National General, called him for details. The question that changed everything: “Do you have anyone over 14 living in the house?”
Preciado confirmed that his son and daughter lived in the house. They were not in the car during the accident, and they do not have licenses.
The acknowledgment of having teenagers at home, led to the retroactive cancellation of his policy. As a result, Preciado faced a denied claim and $5,000 bill for damages to the other car.
Are insurers allowed to retroactively cancel your policy?
The question is whether the insurance company was in the wrong. The California Department of Insurance (CDI) shed light on a crucial aspect of car insurance.
According to the CDI, insurance companies are within their rights to cancel a policy if individuals over 14 reside in the insured’s home and are not listed on the policy.
Car insurance companies are allowed to set similar provisions in policies. It is not one of the main considerations for setting a premium, but it is a secondary consideration.
The focus is on those with regular access to the insured vehicle, whether licensed or not. This also includes roommates or people living with you temporarily.
The CDI advices to review and update your policy regularly, especially if you have individuals over 14 living with you.
Which lessons can we learn from this?
The revelation leaves many questioning the extent of their coverage and emphasizing the importance of understanding the fine print in their policies.
It is important to not overlook the details when applying for car insurance. For Preciado, the haste in filling out forms led to a costly mistake.
It serves as a stark reminder for all insured drivers to be diligent in managing their policies to avoid unpleasant surprises down the road.
The incident also raises questions about the transparency and communication between insurers and policyholders.
The CDI suggests that insurers should actively educate their clients about the potential pitfalls and intricacies of their policies.
Both insured individuals and insurance companies need to foster a clearer understanding of policy terms, preventing similar situations from catching policyholders off guard.
In the ever-evolving landscape of insurance policies, the responsibility is on individuals to be proactive in managing their coverage.