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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.

Coverage for Hit-and-Run Accidents

A typical hit-and-run accident is a collision between two vehicles, and one of them leaves the accident scene. However, there are other types of hit-and-run accidents. A hit-and-run accident may also involve chain reaction accidents, flying auto parts, auto debris on the road, and objects thrown or shot from other vehicles.

Obligation to Cooperate in Motor Vehicle Insurance

Most automobile insurance policies have a clause that requires an insured to cooperate with the insurance company. The cooperation clause, also known as the cooperation and assistance provision, requires an insured to act in a manner that does not obstruct an insurance company's handling of a claim against an insurance policy. Further, the cooperation clause seeks to stop insureds and claimants from acting together against insurance companies. To breach the cooperation clause, an insured's obstructive conduct must be willful and must prejudice the insurance company.

Business Use Exclusion in Motorist Insurance

Some motorist insurance policies exclude coverage for injuries and damages if they occur while a vehicle is being used for a business purpose. For example, if a driver is using his or her personal van to make deliveries for the driver's home-based business and causes a collision with another vehicle, the driver's insurance company would refuse to pay for the damage caused to the other vehicle and for any injuries to those riding in it. In effect, the exclusion causes a vehicle to drive in and out of insurance coverage depending on its driver's particular mission.

Compulsory Auto Insurance Coverage

The costs incidental to motor vehicle accidents, thefts of cars and trucks, and similar vehicle-related occurrences in the United States are immense. In addition to the human costs, consisting of some 40,000 fatalities and hundreds of thousands of injuries annually, the yearly economic cost of such incidents is extremely high. The understandable governmental response to this situation has been the widespread enactment of legislative provisions which, in an attempt to assure that at least some reimbursement is made available to persons who suffer injuries from vehicle-related causes, make it compulsory for the owners and operators of motor vehicles to acquire and maintain insurance on their vehicles in order to be allowed to operate those vehicles on the public streets and highways.