Was my insurance technically cancelled?
A few weeks ago I received a cancellation notice effective two weeks from then for my home insurance because of a single occurrence of a lack of funds. I immediately paid the balance due and had the insurance company confirm that coverage would continue without interruption.
I am now in the process of shopping home insurance for a property I am buying and one of the questions asked by all is if my insurance policy was ever cancelled in the past 5 years. I answered "No" as technically I have never stopped being covered by my insurer and they agreed to keep the policy active. Did I answer correctly ?
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Take a closer look at that question you are being asked. Usually (all cases that I can ever remember seeing), what you are being asked is "was your insurance policy ever cancelled in the past 5 years for any reason other than non payment of premium?".
If the new insurance company does not qualify this question with something like: "... for any reason other than non payment of premium", then ask them if non-payment of premium would constitute cancellation. I would be surprised if it did.
It happens frequently enough, that when someone changes insurance companies, or moves to a new apartment/house, they forget to officially "cancel" the existing insurance coverage... they just stop making payments. They will usually have to "officially" cancel the policy later, but in many cases the policy may lapse due to non-payment of premium in the meantime.
The new insurance company is usually not really so worried about cancellation due to non-payment of premium. They are trying to find out if there was a more serious reason for the cancellation, such as fraud, or violation of terms.
The issue of "continuous coverage" is a another matter and you will usually be asked about this separately. After all, you can voluntarily terminate your insurance coverage at any time and create a break in coverage without having your coverage cancelled by your carrier, so to say your coverage has never been cancelled does not mean you never had a break in coverage. The new insurance company will usually want to ask you about both of these things.
If you never had a break in coverage, then you can answer "No" honestly. Your insurance was not cancelled.
The reason that this question is asked is this: If you did have a lapse in coverage, and a problem arose during the time you were not covered, you might be trying to obtain a new insurance policy and then immediately make a claim on the situation that occurred while you were not covered. If you have been continuously covered for the last 5 years and continue to be covered now, it negates that possibility.
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