Final answer:
Option C, 'Claims history,' is not a valid reason to cancel a personal auto policy after the first 60 days of coverage, as insurers would have accounted for this upon policy issuance. In contrast, material misrepresentation, driver's license suspension, and non-payment of premiums are valid reasons for cancellation after that period.
Step-by-step explanation:
The question poses a scenario regarding the cancellation of a personal auto policy after the first 60 days of coverage. There are several legitimate reasons why an insurance company might cancel a policy, and the question provides a list of options, asking which one is not a valid reason for cancellation.
Here are the valid reasons for a personal auto policy to be canceled after the initial period:
- A. Material misrepresentation: This occurs when the policyholder has provided false information that is crucial to the assessment of the risk or the terms of the insurance.
- B. Driver's license suspension: If the policyholder's license is suspended, the insurer may consider it a significant change in risk, justifying cancellation.
- D. Non-payment of premium: Failure to pay the insurance premium is a common reason for policy cancellation.
On the other hand, a claims history would not be a valid reason to cancel a policy after it has been in effect for 60 days unless the claims were associated with fraudulent behavior or misrepresentation. Insurers take claims history into account before issuing the policy and adjust their rates accordingly. However, after the policy is in force, claims alone would not be a sole basis for cancellation beyond the initial review period, provided all other terms are met.