Other Than Life (OTL) Practice Exam

How can an auto policy be terminated by the insurer?

1. By notifying the insured in person

2. By giving notice via 15 days registered mail

3. By email notification

4. By public announcement

The correct answer is: By giving notice via 15 days registered mail

The correct answer relates to the specific procedures that an insurer must follow to terminate an auto policy, which is governed by regulations set forth in insurance laws. Insurers are required to provide a formal notice of termination to the insured, which must be executed in a manner that ensures proper communication. Giving notice via registered mail is a widely accepted method because it creates a record of the notice being sent and received, thus ensuring that the insured is properly informed about the termination of their policy. This method also adheres to legal standards that demand certain formalities be followed to protect the rights of the insured. Other methods such as notifying the insured in person may not always be practical or documented, making it less reliable. Email notification may not meet the necessary legal requirements since it might not guarantee receipt, and can be perceived as less formal. Public announcements do not ensure that the specific insured individual is made aware of the termination and lack the personal notification needed in insurance communications. Therefore, using registered mail aligns with both the legal framework and best practices for terminating auto policies effectively and reliably.