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Terminating of an insurance contract

Can an insurance company terminate voluntary insurance?

An insurance company can terminate voluntary insurance under certain conditions. In such cases, the insurance company must state the reason for the termination, which must be in compliance with law and good insurance practice.

Such reasons may be, for example, if the policyholder

  • has given the insurance company incorrect or incomplete information
  • has failed to comply with precautionary guidelines
  • has wilfully or through gross negligence caused an insured event.

Automatically renewed non-life insurance continues for one insurance period, usually one year, at a time, unless the contract is terminated by either party. The insurance company is therefore entitled to terminate an automatically renewed non-life insurance policy at the end of an insurance period.

Generally, the reason for termination must be based on the insurance company’s underwriting principles and the insured risk. For example, an insurance company may terminate the insurance after assessing that, based on the policyholder’s exceptionally frequent and expensive claims, the insured risk is too high.