For more information, visit our section on Auto Insurance.
May my insurer cancel or decide not to renew my insurance?
During the first 60 days of the initial policy, an insurer may decide to cancel a policy for any reason that is not otherwise prohibited by Maine law. For example, the law prohibits refusal of insurance solely on the basis of the applicant's age (age 65 or older), credit information, or status as a volunteer driver. Any cancellation notice received by the insured 60 or more days into the policy, however, is considered a mid-term cancellation and must be based upon one of the permitted grounds in the Maine Automobile Insurance Cancellation Control Act (24-A M.R.S.A. §§ 2914, 2915, 2916-A). These grounds are as follows:
Nonpayment of premium: Your premium is due on or before the date shown on your bill, depending on its wording. If payment is not received by the date indicated, the insurer has the right to cancel your policy. There is no "grace period" in Maine law for payment of any property or casualty insurance premiums.
Fraud or material misrepresentation affecting the policy or presentation of a claim: Concealing information that would affect the insurer's decision to accept your application or otherwise affecting the policy or providing false information relating to a claim could result in cancellation of the policy.
Violation of terms or conditions of the policy: Failure to comply with the terms and conditions of your policy could result in cancellation of the policy.
Suspension of license: Maine law does permit an insurer to cancel your auto policy if the named insured, other household operator or customary operator of the vehicle has had a license suspension during the policy term or within 180 days of its last renewal date. (There are a few exceptions that do not trigger grounds for cancellation: the first or second suspension of a provisional license, and a suspension for illegal transportation of liquor by a minor.) Insurers must provide evidence of the suspension at a hearing. If you are disputing the suspension itself, that issue should be addressed with the Bureau of Motor Vehicles, the agency responsible for imposing such actions. The issue for the Bureau is whether the license was suspended, and not whether the suspension was appropriately imposed.
In addition, a policy may be nonrenewed for any reason that would support cancellation, as well as for certain convictions or accidents as listed in the Cancellation Control Act. A named insured who has received either a mid-term cancellation notice or notice of nonrenewal may request a hearing. Please see the FAQs relating to Hearings for more information.
What effect will repeated cancellation for nonpayment have on my ability to find coverage in the future?
You could be refused coverage altogether, or insurers might require that you submit most or all of the premium in advance with a bank check or money order.
Why is the insurance company not returning all of my premium after the policy was canceled?
Depending on the type of policy, you may be required to pay a minimum premium, or the premium may be fully "earned." In other instances, if you replaced your coverage with a different company, during the policy term, you may be subject to a "short-rate" penalty, which is usually about 10% of the unearned amount. You might also have some premium due for recent changes in coverage. The company should be able to provide a detailed billing history that explains the return-premium calculation.
My agent indicated that the company will add my daughter to my policy and charge for her, even though she only has a permit. Is this acceptable?
Yes, she is considered a licensed driver. Under Maine law, the definition of driver’s “license” includes a permit or privilege to operate a vehicle.
Why are auto insurance rates higher for younger drivers?
Young drivers have statistically shown poorer loss experience than other drivers. In other words, they have more accidents because they have less driving experience than other drivers. Rates are structured so that drivers with greater frequency or cost of accidents pay higher rates than drivers with lower frequency. Rates are based on the average experience of a group of drivers with similar characteristics, so young drivers as a group have higher rates.
The company is charging me an additional amount on each bill for an "installment fee." Is this legal?
Maine law does not require an insurer to provide installments in lieu of requiring payment in full at the beginning of a policy. Installments are offered for the benefit of policyholders, and result in an increased cost to the insurer. These nominal fees are permitted.
Am I required to complete a medical questionnaire?
Insurance companies generally may not cancel your coverage if you do not respond to a medical questionnaire. The only exception to this is if your policy is considered "new business" which means that it was placed within the last 60 days. Insurance companies are not prohibited from asking you to complete a medical questionnaire. They do have a right to know if there are medical conditions that have developed which might make it impossible or difficult for you to operate a motor vehicle.
The agent quoted me a premium for a new policy, which I accepted, but the policy came in at a higher rate. Doesn't the company have to honor the quote?
No, the company must calculate your premium in accordance with its current rates that have been filed with and approved by this Bureau, even if the agent quoted a lower premium. The agent's quote could have been in error, or the information you provided to him may have been incomplete or incorrect. Companies order motor vehicle records, claim reports and credit reports, each of which may affect the final premium, and may contain information that was not available to the agent at the time of the quote.
The BMV is requiring me to file an SR-22. What is that?
The SR-22 filing is a certification that you are covered by auto insurance. This is usually required if you have been involved in an accident and had no insurance or if you have been convicted of a serious violation. Maine's BMV will only accept an SR-22 from a company that is licensed to sell insurance in Maine. Therefore, if your Maine license is suspended pending an SR-22 and you are attempting to obtain a license in another state, your company in that state must also be licensed to do business in Maine. The Bureau of Insurance is not able to assist you in obtaining out-of-state insurance to meet this requirement for your license.
My teenager just got his license. The company has added him to my policy even though he's not going to drive my cars. Can they do that?
Yes. Any resident holding a drivers license is considered to have access to the household vehicles. Your policy includes any resident family member as an insured under your policy. As the policy automatically provides coverage, the insurer is allowed to consider any resident driver when establishing the rates for your policy.
Why am I required to carry uninsured motorists coverage?
Uninsured motorists coverage is required by law. It was introduced many years ago to try to address problems that arise when insured drivers are involved with accidents with others who do not carry liability coverage. Even though we now have mandatory automobile liability insurance, the Bureau of Motor Vehicles (BMV) estimates that about 7% of all operators are still uninsured. This coverage protects you against bodily injury losses caused by an uninsured or underinsured driver, and is only a small part of the cost of insurance.
What if I can't find coverage?
With many auto insurance companies competing for business in Maine, most drivers have no problem finding the auto coverage they need.
However, it is possible that you may not be eligible for an auto policy with any company. This is most likely to happen when you have a poor driving record. If this is your situation, there is another option that may be available to you.
If you are unable to find a company willing to provide you with auto coverage you may be eligible to buy it through the Maine Automobile Insurance Plan. The Plan offers auto policies that provide the amount of coverage required by Maine law, as well as optional coverage for physical damage to your vehicle.
To apply for coverage through the Plan, you will need to work with a certified producer. You can find more information about the Plan and a tool for finding a certified producer at the website of AIPSO, the nonprofit organization that manages the Plan.
Does the Bureau require insurers to increase their premiums?
No. Insurers set their own premiums based on what they have determined is necessary to cover claims and other expenses. Although insurers are required to use the rates that have been filed with and approved by the Bureau, the Bureau's role in the rate-making process is limited to making sure that rates comply with Maine law. The Bureau reviews all rates filed by auto insurers and will object to a company's rates if they are excessive, inadequate, unfairly discriminatory, or otherwise in violation of Maine's insurance regulations.