If you and your spouse have two vehicles on one policy to save money that is excellent. But what happens when one spouse gets a bad driving record because of moving violations and/or chargeable accidents. Your premium at renewal may go sky high and you may lose certain discounts. Maybe you have been with this company for fifteen years and are pleased with the agent and service. What do you do? Your spouse needs to get a separate policy.
First, the spouse with the bad driving record needs to get another policy with another company. Preferably with a company that gives very cheap car insurance no deposit. Check with your state insurance department for a list of non-standard companies.
Non-standard companies specialize in helping drivers who are young, newly licensed, have poor credit, or have bad driving records who also offer car insurance with no upfront payment. A standard company is almost the opposite; they have good rates for drivers with experience and clean records.
Second, after your spouse gets another policy you must make sure that the new company surcharges their policy for all the accidents and violations. The reason you do this is to make sure the original policy stays clean and retains all discounts. Your original company will probably request a Declaration Page or your spouse’s policy to show all the accidents and violations are being surcharged.
Third, some companies require that if you delete the spouse’s car from the policy, you must exclude them also. Be very careful about this. Your spouse can stay on your policy as a driver without being surcharged if he/she is surcharged on another policy. The exclusion clauses from auto insurance companies vary.
By signing the exclusion waiver, your spouse might not be covered for any accident on your vehicle. Don’t be pressured to exclude your spouse if they have their own policy. If you are, contact your state insurance department for clarification.
Fourth, when your spouse gets another policy, make sure that they get the same limits of liability as yours. For example, if your limits are $25,000/$50,000 your spouse should have the same limits. This is a requirement of most auto insurance companies in the U.S. All auto insurance policies in the same household should have the same limits of liability.
Fifth, make sure that the policy your spouse gets is a six-month policy and the policy is with a company that surcharges for only three years not five years. This will enable your spouse to serve minimum time with another company and after the three years are served, drop one policy and combine your vehicle coverage again to get the multi-car discount.
Cancelling your Policy Correctly
If you switch companies to save money or for more benefits, be certain to cancel your policy correctly. Failure to properly cancel your policy can cause you serious problems. If you are cancelling your policy mid-term for any reason, you must do it in writing. You should not just make a phone call to your agent or company. Messages could be lost or misplaced. You need written documentation. Too many consumers just let their auto insurance policies cancel out by neglecting payments. That’s a big mistake. If the company cancels your policy for non-payment that can be a negative mark on your payment history, which could result in higher premiums in the future.
Also, by not cancelling in writing, you could incur an earned premium bill from the insurer. Earned premiums are when the company covers you beyond your paid premium until the policy cancels. If this happens you will owe the auto insurer money. The auto insurer will send you a bill, after the policy has cancelled, telling you that you owe “X” amount.
If you ignore their collection efforts they might send it to a collection agency. This could affect your credit rating. This earned premium is a big problem, especially for people who have financial problems or low income and have difficulty maintaining auto insurance coverage.
One way an earned premium can occur is when a mistake is made on the auto premium quotes. If the agent does not inquire about, or if the consumer does not volunteer information regarding accidents and/or moving violations, high rates can occur. Also, some agents will “low ball” your quote. What this means is that he’s quoted you a low rate just to get your business.
Later, when your rate is finalized, the big premium bill hits you
I have heard of agents giving discounts that the consumer didn’t qualify for, like very cheap car insurance no deposit or homeowners. If this happens, you must get the original application that you signed. Hopefully, the application was signed and the quote was explained to you properly.
Always! Get a copy of your application. Make the agent copy or print it off the computer. If it is an online insurance company make them fax or email you a copy. This is your proof of what you told the agent and agreed to. If the agent made an error, this is your proof. Whatever happens to cause an increase in your premium call the company to complain? If no action is taken to cancel your policy immediately and call your state insurance department.
The following information needs to be in your cancellation letter:
- Name as it appears on the application
2. Address that is on your policy
3. Contact numbers, home and cell
4. Policy number
5. Date on which you want the policy to cancel
6. Name and the effective date of the new company, if known
7. Request confirmation of receipt of the cancellation request
8. If sending by mail, use certified mail
You can take the letter to your agent’s office or you can email it. Sign an additional company notice of policy cancellation. If you have a legal plan at work, have them send a letter also.