Illinois Casualty Insurance State Practice Exam

Which of the following is NOT a valid reason for an insurance company to cancel an auto policy within the first 60 days?

1. Nonpayment of premiums

2. Too many claims

3. Change in address

4. No claims made

The correct answer is: Change in address

The premise of the question revolves around the valid reasons for an insurance company to cancel an auto policy within the initial 60 days of coverage. In this context, a change in address does not constitute a valid reason for cancellation. Changes in address are common and can happen for a variety of legitimate reasons, such as moving for work, personal preference, or other life changes. Most insurance policies allow for the insured to update their address without leading to a cancellation. The insurer typically evaluates how a change in location might affect coverage and premiums, but this alone is not sufficient grounds for terminating the policy during the initial phase. On the other hand, nonpayment of premiums is a well-established reason for cancellation, as the insurer relies on premium payments to maintain coverage. Similarly, having too many claims, especially within a short time, can indicate higher risk to the insurer, prompting a cancellation. Lastly, having no claims made would not warrant cancellation; instead, it suggests stability and reduced risk. Thus, the only option that doesn't fit as a valid reason for early cancellation is a change in address.