Function

• Insurance cancellation laws in Illinois restrict the reasons an insurer may use to cancel a policy and provide the insured the right to notification and a chance to dispute the termination. The laws give the insurers legal means to end coverage without penalty when legal cause exists, but the policyholder must receive notice in enough time to find other coverage.
  
  

Timeframes

• An insurer can cancel an auto or homeowners policy during the first 60 days for various reasons, including the uncovering of an increase in risk. The policyholder has more rights once the policy is older than 60 days, but the insurer can cancel when payments are late, fraud was involved in getting the policy or the policyholder violates the terms. Cancellation of health insurance includes at least 30 days' notice to the insured and the return of outstanding premiums under state law, but federal laws provide extra protection to policyholders. An insurer can cancel life insurance once the policyholder owes at least six months of payments.
  
  

Notification and Disputes

• The insured must receive a cancellation notice at least 10 days before termination for not paying the premium, and 30 days before for all other cancellations under both auto and homeowners policies. The policyholder must file a dispute with the Illinois Department of Insurance at least 20 days before the cancellation date unless the reason is nonpayment. The dispute must clearly explain why the policy is not subject to cancellation under the reason the insurer gave.
  
  

Considerations

• Drug abuse within last three years by any person using an insured vehicle or living in the insured's home is a valid reason for an auto insurer to cancel a policy after 60 days.
  
  A decrease in the home's value increases homeowner's policy risk, but the insurer has to give the homeowner some time to correct problems before cancellation in that case. Insurers cannot cancel homeowners insurance because of claims arising from hate crimes under Illinois law.