Whether you’re a brand new driver or are someone who has been behind the wheel for decades, you need auto insurance. In addition to protecting you from financial liability in the case of a vehicle accident, auto insurance is required by every state. Required coverage amounts vary by state and circumstance; newly purchased and financed vehicles, for example, require comprehensive and collision coverage. For drivers of older vehicles, it may be the case that the bare legal minimum is enough to get by.
What happens if your car insurance is cancelled? What circumstances or situations allow for an insurance carrier to decline your coverage? For high-risk insurance customers, the possibility of being dropped by your insurance provider is real. It’s not the only reason for policy cancellation, but it is a major factor.
If you’re concerned about being dropped by your insurance carrier, you’re not alone. A lapse in coverage can be a big legal headache. Even if it happens, there are still options available to you to keep you both safely insured and on the road.
Key Takeaways about Car Insurance Cancellation
- Auto insurance companies can drop you for high-risk driving behaviors
- Auto insurance companies can also drop your coverage for reasons out of your control
- There are options for drivers whose car insurance has been cancelled
Can a car insurance company drop you?
An insurance policy can drop you from your policy, and often without much notice. There are a few different reasons an insurance policy may drop you, however. One being that an insurance company discontinues a particular policy offering.
Another reason could be that state laws may have recently changed and your vehicle is no longer eligible for a certain type of coverage. This is often called “nonrenewal.”If your policy is being cancelled due to nonrenewal, you likely have a few options because policy non renewal carries no stigma and will have little to no impact on shopping for new coverage.
If the insurance company has decided to cancel your policy for other reasons, your options may be more limited. In the best case, you’ll simply have to pay a higher premium and be more careful about your driving habits. In more dire cases, you’ll have to shop for insurance on what’s called the “nonstandard” market.”
What to do When Your Car Insurance Drops You
If your insurance company decides to drop you and your auto coverage, the first thing to do is not panic. Carefully read your notice of cancellation and determine how much time you have to shop for coverage. If you feel like the cancellation is a mistake or unfair treatment, you may have the option to appeal. Even if you plan on appealing, it’s a good idea to prepare to find a new insurance company by doing the following:
- Gather any documents related to your vehicle
- Don’t drive without insurance
- Pull documentation from the insurance company, especially policy details and coverage
- Start shopping around for new auto insurance
Even if you win your appeal, it may be worth exploring alternate avenues for auto insurance. Some carriers can offer discounts if you switch, for example, and others may offer additional benefits your current company does not.
Reasons an Insurance Company May Cancel Your Policy
Insurance companies can cancel your policy for a variety of reasons outside of your control. This can include the decision to no longer offer a particular product in your state. Most often, the reasons for cancellation relate to your risk profile.
For drivers who are prone to accidents, fraud or nonpayment, cancellations can happen more frequently. Common reasons for cancellation include:
- High-risk driving behaviors: Some of the common reasons for cancellations involve high-risk driving profiles. Any time you’re involved in at-fault accidents or moving violations, your premium costs can rise. At a certain point, engaging in reckless driving behavior can become too expensive for the insurance company to feel comfortable. When that’s the case, they’ll likely cut you off.
- Nonpayment of your premium: Failure to pay premiums in a timely manner will often result in policy cancellation. Most companies will offer a grace period for payment. Eventually, however, that goodwill disappears and they’ll cancel your policy.
- DUI conviction: Someone who has engaged in driving under the influence of drugs or alcohol will have trouble getting insurance. This risky behavior can lead to damage to your vehicle, other property, and even injury or death.
- Suspended or revoked driver’s license: A DUI conviction often involves license restrictions or suspensions, but other repeated moving violations can lead to the same result. If you’ve lost the legal ability to drive a vehicle, your insurance company may choose to cancel your policy.
- Medical concerns: Sometimes an insurance company can cancel your policy due to health concerns. Heart issues, epilepsy, and other health problems can impact your ability to drive. If your physician diagnoses you with one of these conditions, they may be obligated to relay that information to the DMV/BMV and your insurance company. This may lead to higher premiums or cancelled auto insurance.
Can an insurance company cancel your policy without notice?
Auto insurance companies can cancel your insurance at any time. Insurers must provide some degree of notice when they decide to cancel your policy, but that amount of notice varies from state to state. Some states require 30 days, while others can provide as little as 20 days notice.
Your insurance company will likely provide a car insurance cancellation letter or a car insurance non renewal notice. If you feel like your policy has been cancelled without proper notice or you’d like to appeal or complain, you can contact your state insurance department.
Can you appeal car insurance cancellation?
While you can appeal your car insurance cancellation by contacting your state insurance department, it’s still a good idea to start shopping for new coverage in the meantime. Your appeal can often take a while to process, and you don’t want to be without car insurance.
Getting Car Insurance Coverage After Cancellation
If your insurance company has cancelled your policy due to no fault of your own, your options are fairly open. At SelectQuote, we can help you shop around and compare all of your options for coverage.
It’s important not to let your insurance lapse too long. Auto insurance is required in every state and driving without insurance can incur hefty penalties.
If your auto insurance has been cancelled due to high-risk behavior, nonpayment of premiums, or license suspension, getting car insurance after cancellation will probably be a bit more difficult. You’ll likely run into higher deductibles and even instances where you’re unable to find coverage. This is where working with SelectQuote can come in handy. We’ll take the time to get to know your situation and make sure you’ve explored all of your available options.
Although you may end up with heftier payments, you can often show insurance companies a willingness to change behavior. Maintaining a clean driving record, for example, or taking a defensive driving class are direct proof of willingness to change. You may eventually become eligible for standard coverage again, which substantially opens up your options for auto insurance coverage.
Explore Your Auto Insurance Coverage Options with SelectQuote
If you’re worried about your car insurance policy or are considering your options due to loss of coverage, we can help. Our Customer Care Team can help you navigate the process by reviewing your most recent policy, comparing your options for coverage, and ensuring you have the right auto insurance that’s right for your needs.