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Cancellation of Auto Insurance for Nonpayment of Premiums

The mandatory nature of motor vehicle insurance in the United States means that the system under which cars and trucks are insured involves a three-part relationship among the vehicle owner or operator, the insurer, and the government of the state where the car or truck is located. The heart of the auto insurance business relationship, though, is the policy of insurance, a bilateral contract under which the insurer agrees to provide the requested insurance coverage on a vehicle and pay valid claims and the insured agrees that he or she will in return pay the premiums due under the policy. When an insured fails to make timely payment of the premiums or fails to pay them at all, the insurer's ultimate recourse is to cancel the policy for nonpayment of premiums.

Ambiguity in Auto Insurance Policy Language

Policies of motor vehicle insurance are detailed documents that cover numerous aspects of the business relationship between an insurer and its insured. When this fact is matched up with the great variety of ways in which incidents can occur that may give rise to claims under a policy, it will not be considered surprising that the insurer and the insured will sometimes hold differing views of the meaning of a particular policy provision. When a party to a contract of motor vehicle insurance asserts that potential ambiguities exist in the language of an auto insurance policy, courts are often called upon to decide the meanings of the disputed policy terms and rule on related issues of coverage under the policy.

Per-Person Liability for Auto-Insurance

Insurance companies can limit liability in automobile insurance policies by setting a per person limitation on the amount of benefits that will be paid under the policy for bodily injury to or the death of one person per accident. Whether the limitation is stated as person or each person makes no difference. Such limitations on liability are necessary. Without them, an insurance company could be at risk for more than the funds that it has to pay its claims. The insured pays a certain amount, called a premium, based in part upon the policy limits.

Personal Injury Automobile Accident Cases

If an insurance policy covers accidents of travel, it must be shown that a death or disability resulted from such a risk before benefits can be paid. A death caused by the collision of automobiles is clearly within the ordinary interpretation of accidental means. This result is not prevented by any negligence of the insured. Courts feel that clauses of this nature must be given a reasonable construction. If the insurance terms are not expressly limited, some courts will extend coverage to situations where the use of an automobile was not an important factor or where the particular loss was fairly removed from an event that involved the use of an automobile. Other decisions, however, are not as generous. Some courts will not trace back an injury to an automobile or extend benefits to a particular loss or expense.

Intentional Injury Exclusion in Auto Insurance

When a vehicle is involved in an automobile accident, the conduct of an insured may activate the automobile insurance policy's exclusion for intentional injury. Intentional injuries include suicide and assault, among other acts. Even though some states require automobile insurance companies to provide statutory minimum coverage, the companies may exclude coverage for intentional injuries. The intentional injury exclusion prohibits an insured, which caused an intentional injury to himself or herself or to another person, from recovering insurance benefits for that injury. This is a common exclusion in automobile insurance policies. Further, most no-fault statutes contain intentional injury exclusions.