What action can trigger a policy cancellation by an insurer?

Non-payment of premium or fraud are valid reasons for an insurer to cancel a policy. When a policyholder fails to make timely premium payments, the insurer may deem the policy inactive due to lack of financial backing, which directly impacts the insurer's ability to cover potential claims. Insurers rely on timely premium payments to maintain their cash flow and ensure that they can fulfill their obligations to policyholders in the event of a claim.

Additionally, if an insurer suspects fraud—such as misrepresentation of information during the application process or submitting false claims—it can lead to policy cancellation as this undermines the trust and validity necessary for the insurance contract. The relationship between insurer and insured is built on transparency and honesty; any breach of this trust, through fraudulent activity, justifies cancellation.

Timely payment of premiums and upgrading policy coverage reflect responsible behavior by the policyholder, whereas claiming minor damages does not trigger cancellation but may instead relate to how the insurer assesses risk or determines premium rates in the future.