The rationale behind this choice centers on the fundamental obligations of both the insurer and the insured as stated in the insurance contract. Non-payment of premiums represents a breach of the terms of the insurance agreement, leading the insurer to consider cancellation as they are not receiving the agreed-upon compensation for the coverage provided. Misrepresentation, on the other hand, involves providing false information that can influence the insurer’s decision to provide coverage or determine premium rates. This act undermines the trust and basis of the insurance relationship, giving the insurer grounds for cancellation due to the perceived increased risk or the validity of the policy itself being compromised.
In contrast, while filing too many claims in a year can raise concerns about risk assessment, it does not automatically lead to cancellation unless there is a specific language in the policy addressing excessive claims. Switching to a different type of coverage is often a normal process in insurance, provided all parties agree and the insurer offers the respective coverage. Lastly, frequently requesting policy updates may indicate a commitment to keeping the policy aligned with changing circumstances, which is generally welcomed by insurers. Hence, these actions do not present the same clear contractual violations as the non-payment of premiums or misrepresentation does.