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ISSUED 11/16/2010 FOR IMMEDIATE RELEASE

CONSUMERS MUST BE ADVISED OF AMOUNT OWED WHEN AN INSURER TRIES TO CANCEL AN AUTO POLICY FOR UNPAID PREMIUMS

Insurance companies must let people know how much they owe before they cancel automobile policies for non-payment of premiums.

The New York State Insurance Department recently helped 73 people get a chance to restore their automobile coverage after an insurance company improperly cancelled their policies by failing to notify them about the amount they owed.

“Consumers must be treated fairly and there are requirements in place to make sure that happens. One of those requirements is the obligation of an insurance company to make sure a consumer knows how much is owed on a premium before the insurer acts to cancel for non-payment,” Insurance Superintendent James Wrynn said.

The Insurance Department discovered that the 73 policies were improperly cancelled after one of the consumers filed a complaint with the Department’s Consumer Services Bureau about his policy’s cancellation by ACA Insurance Company.

The Bureau’s review of the single complaint led the Department to uncover the fact that the insurer failed to show the amount the consumers owed for their premiums when cancellation notices were sent out.

Besides letting consumers know how much they owe – and insurers can only list the amount in arrears and not the cost for coverage going forward – insurers must also:

  • Provide consumers 15 days from the date the notice is mailed to stop the cancellation by paying the premium.
  • Let consumers know that a policy cancellation will result in notification to the state Department of Motor Vehicles that a vehicle is uninsured and therefore subject to license and registration revocation.
  • Mail the cancellation notice to the correct address that is on file for the insured individual. And that means that it’s a good idea for consumers to always inform their insurers of address changes – in writing.

Consumers should contact their insurance company, agent or broker to discuss their specific insurance questions. They should also feel free to contact the Insurance Department’s Consumer Services Bureau from 9 a.m. to 5 p.m., Monday through Friday toll-free at 800-342-3736 if they need further help. Additional information is available on the Department’s website, www.ins.state.ny.us.

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