Cancelation of commercial auto insurance in Texas means the termination of an existing insurance policy of a business. This cancellation can be initiated by the insurer or the policy holder. When businesses initiate a cancellation the process is referred to as client-initiated cancellation. A client-initiated cancellation is typically done for any of the following reasons:
If the business no longer owns the insured commercial vehicles.
If the premiums are too expensive.
If the business moves outside of the area covered by the insurer.
If the payment plans are not suitable enough for the business.
If the insurer experiences bad customer service.
Note: Never cancel commercial auto insurance coverage unless the insured vehicle is sold or there is another replacement policy already in place. It is illegal to drive without at least the minimum amount of state-mandated liability coverage. If the cancellation is due to the high price of coverage, speak with an experienced Texas-licensed commercial auto insurance agent who can get multiple quotes from competing insurers, for you to compare.
The owner of an insured business in Texas can cancel its commercial auto insurance policy by informing the insurer. Alternatively, the business can employ the services of a Texas-licensed commercial insurance agent to cancel the policy. In Texas, the cancellation process is as follows:
A business representative or licensed commercial insurance agent will identify possible repercussions of canceling the commercial auto insurance policy
If the agent sees issues with stopping the coverage, they provide you with a list of alternatives based on the underlying issues
Where there are no identifiable problems, the business owner can notify the insurer of the intention to cancel the policy
The insurer will provide some paperwork relevant to the cancellation process
The business representative will fill out the required forms and return them to the insurer
The insurer will process a refund of unused premiums. However, the insurer may charge a cancellation fee
When a business cancels commercial auto insurance in Texas, it can be detrimental as it opens up the possibility of bearing certain losses, especially if the business does not have other similar coverage to back it up. On the other hand, it can be a good thing to cancel a commercial insurance policy if the premiums are too expensive and the business can no longer pay, or if the insured vehicle has been sold. It is best to consult with a Texas-licensed insurance agent before canceling a commercial auto policy. An agent will help determine if cancellation is what is best or offer alternatives in terms of more affordable coverage options.
Insurers often charge a penalty fee for canceling a commercial auto insurance policy in Texas. The penalty is usually stipulated in the policy contract from the start of the transactional relationship between the insured business and the insurer. Ask your agent to point it out in the policy terms. \
Yes, in Texas, in case of a policy cancellation insurers are obligated to refund unused commercial auto insurance premiums, minus whatever cancellation fees were stipulated in the contract. If the coverage was paid in full to the insurer, the unused premiums are returned to the insured business. If the canceled commercial auto insurance was being financed using 3rd party premium financing, and a credit was generated, the lender receives all the funds first. After the lender takes out what is owed to them, the remainder, if any, is returned to the insured business.
It is best to contact a Texas-licensed commercial insurance agent if there is a need to reinstate a commercial auto insurance policy. Reinstating a policy may require completing some paperwork, which is best handled by an agent. However, policy reinstatement is at the sole discretion of an insurer. If the reinstatement is not an option, a knowledgeable agent will suggest the most optimal coverage options to fit the current needs of your business.