Originally Posted by Bullet Ride
...The whole idea behind the inspection is to prevent insurance fraud where people get a car insured and then make a claim for damages that existed before the insurance policy existed. Some people also have a tendency to insure cars that don't exist or that they never owned and then report them stolen and get a settlement. This just gives them a record of the general state of your car around the time the policy was enacted.
Companies will also use the process to collect information. Who brings the car in, are they a listed driver on the policy? Is the car brought to an inspection station in the region the car was reported to be operated in. Older cars are more likely to have pre-existing damage so that is why there are more frequent inspections requested. It is also procedure with many companies to demand an inspection when the vehicle owner or primary driver is under 30. (greater likelihood of performance mods) Inspections cost the company money, so that is why some don't do them at all. Some companies will accept a safety or even, as some already mentioned, just photos in place of an inspection.
Originally Posted by NOTORIOUS VR
Regardless of what the reason for a cancellation, you're screwed if any insurance company ever finds out you have been canceled on. Just FYI.
As inspections can lead to cancellation, you need to know a bit about the different types of cancellation. As 'Notorious VR' pointed out, you can get screwed. However, there are some cancellations that are worse than others.
Chargeable Cancellations are company imposed and can have a negative impact on your insurance record or driving record, vs non-chargeable cancellations such as when you request termination because you are selling your car, moving away etc...
The reason for cancellation alone is not what screws you. Having a gap in coverage because of a chargeable cancellation is what hurts. A cancellation for not payment alone isn't a huge problem as most companies will allow 1, maybe 2, on your record in a specified period of time (usu 2-5 yrs). But if you didn't get a replacement policy right away, then that cancellation for non pay can destroy a otherwise perfectly clean record
The length of the gap can also play a factor. Though a few companies rate for any gap (even just 1 day) due to a chargeable cancellation. Some companies treat a gap of less than 30 days differently than a gap which is longer.
is the worst. Usually, this indicates you lied on an application or change request. Examples: Saying your dad is the primary driver when actually, you are. Claiming you don't drive to work, but you do. Registering your car in a rural area and saying that is your primary residence. Saying your car is 'completely stock', but it isn't. The insurance contract relies on a principle of "upmost good faith" between you (the insured) and the company (the insurer). If you break that faith, not even the mid-risk companies will touch you for at least 3 years.
can be a stumbling block to obtaining coverage with some companies, but not all. Often "Non-compliance" results from not submitting a requested document, not completing an inspection, etc... The reason you get a "non-pay" cancellation is self-explanatory.
"based on underwriting"
can play a few roles; It is interchangeable with non-compliance (as non-compliance cancellations are based on the underwriting rules of the company). It can also be used in place of misrepresentation, depending on the severity of the situation. If you take your car to an inspection with an unreported CAI, you may get "based on underwriting". If it has a turbo, I'd expect a misrep, especially if you were specifically asked about modifications. I've also seen it used in cases where the drivers licences was suspended and the driver becomes aware of it through the insurance application process (which happens more often then you'd think).
Fact is, the truth ALWAYS comes to light. Even more so as technology and connectivity have progressed.
Your insurance history report is tied to your licence number. If you were ever listed on a policy as a driver, had a claim on a company/friends policy. It is going to show on your report (as well as theirs). The report all companies use (called an "AUTO PLUS") shows all previous policies and specifies why each was cancelled and on what date (in addition to previous claims, listed & excluded drivers, and vehicles insured in the past). If you are hoping that your last cancellation for non-payment will go unnoticed, give up. Not reporting a previous cancellation on a new application for insurance will earn you a cancellation for misrepresentation, which would suck exceptionally hard because if you had disclosed it upfront, it may not have made a difference anyways.
As always, I'm speaking generally here. If you want to know the specific details about your own policy, please contact your own agent or broker.