Insurance Co Retroactively Cancels Coverage After Accident

Time and again, lawyer Steve Lehto’s YouTube channel presents fascinating stories that make us question the intricacies of our legal system. These stories often raise eyebrows as they shed light on situations we believed were well-structured within the law.

In his latest video, Lehto brings us the story of a San Diego man who found himself entangled in a situation with an insurance company that, at first glance, appears nothing short of disturbing. Sergio Preciado experienced an accident in July 2022, and he openly admits that he was at fault—accidents can happen to anyone. That’s precisely why we’re required to carry insurance when driving on public roads. Sergio, like many others, had his own insurance, believing it would cover the damages resulting from the accident.

However, things took a shocking turn when Preciado’s insurance company decided to retroactively cancel his coverage after he filed a claim. They essentially erased his insurance as if it never existed at the time of the crash. What makes this situation even more perplexing is that the California Department of Insurance conducted an investigation and found no wrongdoing on the part of the insurance company.

You might wonder if there’s a reasonable explanation for this unusual scenario. Unfortunately, the answer is not straightforward. It appears that the insurance company, National General, used an underhanded maneuver that, while technically within the bounds of the law, feels deeply unjust. The insurer cited Sergio’s failure to disclose the presence of his children in his household as a reason to deny the claim. However, these children, who are not old enough to drive and weren’t in the car at the time of the accident, had no direct involvement in the collision. Yet, the insurance company argued that because they lived in the same household, they theoretically had access to the vehicle, even if they weren’t licensed to use it.

Due to this reasoning, Sergio’s claim was rejected, and he’s left with a $5,000 bill for the car’s damages in addition to repairing his own vehicle.. Thankfully, this amount only covers the vehicle, sparing him from further financial burdens of bodily harm. Nevertheless, it’s evident to anyone with a modicum of common sense that the insurance company’s behavior in this situation raises serious ethical concerns.