In NC, can an insurance company renew a policy the day after its purchased and delete lien holder information?

Question

I got auto insurance w/ collision and paid the policy in full. After leaving their office, somehow the premium went up 70 dollars and they charged me for that. The next day they renewed the policy, dropped my collision, charging me for the renewal minus the cost of the collision. The charge for the renewal plus the 70 came to 606. They refunded the cost of the collision which amounted to 595 and applied it to the 606. At some point during all this they took the lien holder information off my policy. How is any of this LEGAL?

Answer 1

Oh boy. As an employee of an NC insurance company, I'm going to attempt to clarify some misconceptions that previous posters have posted up here.

First off, NC insurance companies cannot refuse to give LIABILITY insurance to anyone. However, we CAN refuse physical damage coverage (comp & collision, aka "full coverage").

Reasons we can do this? Your driving record, absence of NC driver's license information, inaccurate or missing policy information, your credit history, claims frequency...I can go on and on.

Basically, if the company deems you to be too much of a risk to cover, they CAN cancel your physical damage coverage. It is perfectly legal. However, they have to provide you and your lienholder with some sort of notice that this action is going to happen. At my company, you are notified by mail 90 days in advance of the cancellation. On the cancellation, you are given the reasons for the cancellation and you are given contact information where you can call and ask questions. This same letter would have also been forwarded to any lienholders or additional interests on the policy.

Now, if you are one of the many ignorant people in this world who simply toss their insurance mail aside and don't actually read the material inside, you could have very well missed this letter. Go look through that stack of unopened mail that's likely laying around your house. Its there somewhere. Or if you moved or changed your mailing address and didn't notify your insurance company, you would have never received it anyway. In NC, it is a law that lienholders MUST receive at least 10 days notification of any insurance cancellation. So even if you didn't know this was happening, your lienholder likely did (and has probably already force-placed physical damage coverage on the collateral because you probably didn't read the warning letters they were sending you either).

So, if your company cancelled your physical damage coverage, then it's only natural they deleted your lienholder as well, seeing as how it is unnecessary to list a lienholder on a vehicle that doesn't have full coverage.

If you have any questions about the validity of anything that has happened to your insurance, pick up your telephone, call your agent, and ask questions. And before you assume they didn't notify you of any changes being done to your policy, trust me...they have copies of everything they have done.

Answer 2

I suspect that some terminology is being confused here.

You don't "renew" a policy a year before it expires.

Sounds like you went in and paid it, and after they ran the drivers check, something came up that wasn't previously disclosed, and you were "uprated" by $70. Yes, they can do that. Then they deleted the collision . . based on what? Does your car have a salvage title, and you didn't disclose it?

You need to call them. Yes, changes can be made with a telephone call. Sounds like someone told them to delete the collision & leinholder - you just need to tell them to add it back on.

Either that, or someone is pushing buttons on the computer, who doesn't know what they're doing - it can be fixed, but someone else has to make sure it gets done correctly.

Answer 3

North Carolina has the oddest insurance laws in the US! In NC, every insurance company has to offer coverage to anyone who applies-meaning they cannot deny the higher-risk drivers as every other state is allowed to do. It sounds like your company issued your policy based on your stated information of no or maybe 1 previous claim or ticket, and placed you on a good rating tier. Then overnight they batched your actual claim/motor vehicle/insurance score reports which probably came back with more accidents/tickets, raising you into a higher-risk tier and thus a higher premium. Since insurers who write in NC need to accept anyone who applies for their coverage, most companies will decline physical damage coverage (comprehensive & collision), but keep liability only on your car to essentially persuade you to leave and take the high risk off their books.

It seems like your reports came back with something that was not previously disclosed, which put you into a high-risk tier, and the insurer corrected your policy for correct rating. Yes, it is legal as there's a specific amount of time the insurer has the right to take action on your policy to correct any necessary underwriting information. Because your insurer is no longer covering damage to your car (they removed the comp/collision), they no longer have any fiduciary responsibility, thus removing the lienholder. In all honesty, it does sound legal as NC has crazy insurance laws. If you have any doubt, you should contact your state's insurance commissioner to verify the legality of this action, but your first priority is to make sure you get physical damage coverage on your car as right now you have none. There are companies in NC who sell just physical damage coverage and allow you to keep your liability elsewhere which you may want to look in to. I would contact your insurer and see what they found on your reports as they are sometimes inaccurate as well.

Answer 4

mbrcatz is right, but I would also add that sometimes the lienholder does not want collision with your carrier because there is another policy somewhere out there just for the collision and comp. But you need to be sure about that because if you have a lienholder you MUST make sure the car has comp and collision on it. It's required in addition to liability coverage. You need to call and discuss this. You need to 1. make sure your policy is in force now and 2. What is the total premium 3. Is there comp and collision on there and if not, why?

Answer 5

In NC you have no idea what those people are capable of! One thing for sure, ask questions and get answers in writing because if you have an accident then they will inform you that you only have $2000.00 in medical coverage because you did not purchase a rider! Been there done that so be careful!!! They're in a world of their own down there!