7 mistakes that could nullify car insurance
Your car insurance is a year-long financial commitment that’s going to set you back by a few thousand dirhams. But even after paying all that money you could be in for a rude awakening — When you find out that your car insurance policy has been ‘invalidated’.
Even an innocent slip-up could cost you thousands when your claim is rejected, or even worse, your policy cancelled by the insurer. Not only will your insurance premium go down the drain, but you’ll also be liable to pay for any damages or repairs from your own pocket.
As per the law in the UAE, the insurance company only has the right to cancel the ‘own damage’ section of a comprehensive car insurance policy, and by giving the policyholder thirty days notice. The paid up premium must also be refunded to the policyholder after deducting the pro rata premium for the period the policy has been in force.
There could be various reasons why an insurer would terminate a car insurance policy mid-tenure. Here are some of the most common scenarios where this could happen.
Committing insurance fraud
Dishonesty and fraud are often the top reasons why many car insurance companies cancel policies. If the insurer finds out that you have lied about driver or car details at the time of policy application, have made a fabricated claim, or have in any way deliberately gone against the terms and conditions of the insurance policy, they have every right to drop you.
Non-disclosure of car modifications
It’s best to keep your insurer in the loop if you’re planning to modify your car
Failing to inform the insurance company about any modifications you have made to the car that affect its performance, safety and value can result in your policy being terminated. In this respect, it’s best to keep your insurer in the loop if you’re planning to modify your car so you’ll know exactly what the coverage can be extended to, and what might be excluded outright.
Disobeying traffic laws
Flouting traffic regulations can not only land you in trouble with the authorities but also with your insurance company. Committing an offence like driving with a suspended driving licence or driving under the influence of alcohol could give the insurer substantial reason to cancel your policy.
Ignoring car maintenance
It is the responsibility of the policyholder to keep the car in a good and roadworthy condition at all times. This means you have to ensure that you send the car over for regular maintenance and have any glitches and malfunctions fixed without delay.
Leaving your car unlocked
Most drivers don’t know this but accidentally leaving your car unlocked doesn’t just put your car at risk of being stolen, it also jeopardises your insurance coverage. If it is found that the car was stolen or vandalised after being left unlocked, the insurer can refuse to pay for the loss or damages, or worse cancel your policy.
Using your car for business
Most car insurance policies will clearly put out a disclaimer that the insurance coverage is only limited to the driver’s private use of the vehicle. You may even have checked a box confirming this at the time of policy application. So if you are found to be using your car for business — like making deliveries or transporting passengers — your car insurance policy could be voided.
Loaning out your car
Only you and the named drivers in your policy should be the ones using your car. Loaning out your car to a friend could end up invalidating your insurance. In case the car is involved in an accident while being driven by your friend, the insurance company will not pay for any damages. And as penalty for intentionally allowing your car to be used by a third party, your policy could be cancelled altogether.
Remember to be careful, not reckless, and always speak to your car insurance provider when in doubt. After all, who wants to be dumped by their car insurance company?