Premium Rights:
- When your premium is misquoted.
- When your policy is subject to cancellation fees.
Can the Company Increase My Automobile or Residential Insurance Premium after
the Policy is in Effect?
The insurer gets a time of sixty days from the
effective date of policy to verify the rating and underwriting of a new policy.
During this period, the company is required to notify you if it finds any error
or change in premiums. After passing of sixty days, any notice of change in
premium becomes ineffective.
Usually the
premium is revised due to two reasons, either an error made by the insurance
company or its agent or incomplete information provided by the insurance seeker.
In this situation, the company must inform you about the change in premium in
writing within sixty days from the date of issue of the policy i.e. effective
date and the changed premium is charged from the effective date of coverage.
However, if you do not want to proceed with the changed premium, you can always
request the company to cancel the policy. The earned premium is calculated on a
pro rata basis on the original quotation.
In case
premium revision results from an error made by the company or its agent and you
are not informed of the error within sixty days, the policy will remain
effective as written at the original premium.
However, on
expiry of sixty days the insurer may flat cancel the policy in case of
misinformation and/or misstatement or other matters sufficiently serious to
justify a flat cancellation.
Do I Have to Pay Any Penalty if I
Cancel My Insurance Midterm?
Whenever you initiate cancellation process for any
policy, the premium is calculated on a short rate basis in which the insurer
retains part of the unearned premium to meet its administrative expenses. However,
there are few companies that calculate the premium on pro rata basis.
Therefore, you must review your policy agreement/contract to understand the
cancellation provisions of your insurer.
Apart from
the above, the broker may also retain the broker fee if you hired the services
of a broker and signed an agreement. However, you are entitled to receive full
refund of the broker fee if the broker acted incompetently or dishonestly. If
any dispute over refund of broker’s fee occurs, you can forward your complaint
to the Department of Insurance for review.
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