Insurers typically ask you how many accidents you have had in the past three years when vetting you for cover, yet the question relating to the cancellation of a policy is not time-bound: you are asked if an insurer has "ever" cancelled your cover.

A Cape Town policyholder, who asked not to be named, had a policy cancelled 19 years ago. She discloses this every time she goes through the underwriting process, and pays dearly for it: "Compared with friends with a similar risk profile, I've always paid a much higher premium."

Last week, Ms A decided to get a quote from OUTsurance. In terms of the "cheaper car insurance or R400 cash" promotion, OUTsurance promises that if it can't save you money on your car insurance premium - in other words, beat your premium - it will give you R400 cash.

"I reckoned that I'd be better off either way," she says. But she was in for a rude shock: on hearing that a policy of hers had been cancelled, OUTsurance classified her as "uninsurable".

"I was horrified to hear that. It was like adding insult to injury: the call to cancel my cover in the first place was very unfair. I had had two claims in quick succession; first the radio was stolen out of my car one night and then I had a fender bender. But leading up to those two claims, I'd not had any claims. Since I was about to go overseas, it didn't bother me that my insurance had been cancelled, and two decades ago I didn't know the implications of a cancelled policy."

Cancellation of a policy is very serious, says Auto & General spokesman Martin van Wyk.

It usually means one of two things: you have committed fraud - such as falsified or loaded a claim, or you've had excessive claims. Whichever it is, the insurer has decided that you're too great a risk and cancels your contract. Insurers are fully within their rights to do so, because they are free to contract with whoever they choose.

But is it fair to discriminate against a policyholder on the basis of something that happened nearly 20 years ago?

We all ask if you have 'ever' had a policy cancelled
Martin van Wyk, Auto & General spokesman

Van Wyk says it's more about accurately calculating risk to ensure that everyone is paying the right premium according to their risk profile.

"Insurance company A will ask you how many accidents you've had over the past three years; insurance company B will ask about your claims history over the past five years ... but we all ask if you have 'ever' had a policy cancelled."

He says that your case will be referred to the underwriters when you disclose that you've had a policy cancelled. They will contact the insurer who cancelled the policy for details.

"If you have a car accident every couple of months and you're always at fault, that tells us something. But if you had a policy cancelled 19 years ago, we would not take that into account or load the policy," he says.

When a creditor takes judgment against you, that information stays on your credit profile for five years, and then it is expunged.

And, if you are found guilty of a crime, courts passing sentence look at your previous convictions over the past 10 years. It would be "ridiculous" to hold something against you that happened more than 10 years ago, he says.

There is a caveat. Don't be surprised if no insurer wants to cover you if you have committed fraud.

Van Wyk advises anyone whose policy has been cancelled to shop around.

"Just because one insurer doesn't want to take you on doesn't mean that another insurer would make the same call," he says.

Attie Blaauw, head of underwriting at Santam, says the cancellation of a policy 19 years ago "should have no relevance".

Linda Martin, an HW Brokers account executive, says insurers should be mindful of the principles of "treating customers fairly", which apply to financial services providers.

Natasha Kawulesar, OUTsurance head of client relations, says it's not unfair that the question about cancellations is not time-bound, because some policies are cancelled due to fraud and dishonesty.

Peter Nkhuna, of the ombudsman for short-term insurance, says you must disclose a cancelled policy. If you don't like the quote, keep shopping around until you find the best deal for yourself.