60 Day Waiting Period on New Texas Auto Insurance Policies
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UPDATED: Nov 22, 2020
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When buying auto insurance in Texas, there's a 60-day period after the policy is issued, called the “new policy underwriting period,” which allows the insurance company sufficient time to determine whether or not they want to accept you as a policyholder. During this underwriting period, they'll do the research necessary to make sure that all the information contained in your application is true and factual.
What Occurs During the Underwriting Period?
During this 60-day time period after applying for auto insurance in Texas, the insurer will be making a final determination as to your acceptability as an insurance risk. They gather pertinent information, either online, over the phone or in the office, but this information won't be reviewed for accuracy until later. The writing agent simply goes on the information he/she is given and then binds and issues a policy.
At any time during the underwriting period, the insurance company is within its rights to cancel your coverage for any reason that is both valid and legal. In reality, any “reasonable” concern the company has regarding your suitability or risk profile can cause them to cancel your coverage during the first 60 days. Insurance companies love to collect data and will typically pull numerous records when deciding whether to insure you and how much premium to charge. Reports they often use in the underwriting process include:
- Motor Vehicle Records
- Credit History Reports
- C.L.U.E. Report (Comprehensive Loss Underwriting Exchange), which provides insight into claims that you've previously filed with your insurance company and the amount paid out for your claim(s).
After the 60-day underwriting period has expired, the insurer may only cancel your coverage for specific reasons outlined in Texas Insurance Code 551-104.
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When They Can't Cancel
It's acceptable for an insurance company to decide not to cover you because of reasonable concerns they uncover during the underwriting period; for example, an unreported DUI or accident in your driving history, and other factors that make you a high risk. However, they may also refuse coverage if you get ticketed or are involved in an accident during the 60-day underwriting period. Still, an insurer cannot reject coverage for any reasons that are not legal, such as your:
- Color or race
- Religion or national origin
- Age or gender
- Marital status or geographic location
- Disability or partial disability (unless it can be shown that refusal to issue insurance is based on sound actuarial principles that demonstrate you represent a heightened risk of loss when compared to others the company is willing to insure)
At any time an insurer elects to cancel your auto insurance in Texas, they must provide you with a written notification at least ten days prior to the cancellation date. If you feel you have been canceled unfairly, you have recourse actions you may choose to utilize. You may, for instance, dispute your C.L.U.E. Report or your credit report if these factors put you in the high risk category.
Don't take a cancellation lightly. Immediately look into replacing your insurance so you don't experience a gap in your coverage.