What Does Suspension of Coverage Mean?
Suspension of coverage occurs when an insurance company stops covering a policyholder even though their policy is still in force. This typically happens because the insured fails to meet the terms of the insurance contract. A suspension of coverage can be temporary, and the insured may be able to restart their coverage if they address the issue.
Insuranceopedia Explains Suspension of Coverage
Insurance companies typically suspend coverage because the policyholder stopped making payments. The insured will usually have a window of time to make payments before their entire policy is cancelled.
In addition, suspension of coverage may result from a change in the insured's situation that increases the risk of claim. For example, if an insured stores dangerous materials in their house without the knowledge of the insurance company, the latter would likely suspend their homeowner’s policy.