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New Jersey Laws on Different Types of Car Insurance Cancellation

The law is clear regarding cancellation of car insurance stipulated by the New Jersey Department of Banking and Insurance. In addition to these laws and regulations for all auto insurance policy holders, they also apply to the car insurance carriers in New Jersey. They must be followed to avoid facing penalties and fines.

There are a number of cancellations that mainly apply in the New Jersey auto insurance industry.

Underwriting

All the newly bought auto insurance policies in the state of New Jersey have to undergo an underwriting process. It is the verification of policy information to find out if it meets the company’s underwriting rules. This is done by the New Jersey auto insurance carrier. Within the state, the law allows the auto insurance companies a period of 60 days within which to complete this process. This means that the auto insurance companies have the right to cancel the auto insurance policy within given period. This will happen if the policy is found not to be within the guidelines. The car insurance carrier is required to supply you with an underwriting cancellation notification with a minimum of 20 days’ notice including the reason behind the cancellation.

Voluntary

As a practice policy holders are not supposed to wait till their current policies expire to change their auto insurance providers. Policy holders in New Jersey have the right under the law to cancel their auto insurance policies at any time they see fit. In turn, the New Jersey car insurance companies are require to issue a full refund of any premium that is unused within a period of not more than 60 days from the date the cancellation was requested. However, the policy holder wanting the cancellation must show the insurance company proof that they have a new policy before the process can proceed.

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Mid term

In some special circumstances, car insurance companies are allowed to terminate coverage in the middle of a policy term. These circumstances include license revocation or suspension, policy fraud or non-payment. For license suspension and revocation, a 20 day notice must be given. In case of non-payment, a 15 day notice must be given.

Insurance fraud

In the event that an insurance company discovers that there is fraudulent information provided by the policyholder, it is within their right to cancel the policy at any time. This may include omission of information or misrepresentation with the aim of getting lower premiums. The insurance carrier will give the policy holder a cancellation notice and in more serious situations, it may end up in penalties, fines or even serve some jail term.

For more information on this matter and for information on the best and cheapest car insurance in New Jersey in your area, just enter your zip in the space given above. You will also get auto insurance free quotes.