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In most states, car insurance is required to drive legally. In certain instances, an insurance company can drop you, leaving you with no coverage in place in the event you get into an accident. Knowing what your options are after your policy has been canceled or nonrenewed can help ensure you take the right steps to secure coverage if this happens to you.
Can car insurance companies drop you?
Car insurance companies can cancel, or “drop” your coverage, although you will typically be given enough notice to obtain a new policy. Your car insurance company will likely send you a letter explaining why your coverage has been dropped. If the company neglects to explain its reasoning, you may want to contact your agent or a customer service representative to find out why your policy is being canceled.
Your auto insurance policy could be canceled if:
- You neglected to pay your premium.
- Your driver’s license was suspended or revoked.
- You were not honest on your application.
If your policy has been in force for fewer than 60 days, there may be more scenarios that could lead to cancellation.
What can you do after your auto insurance is canceled?
If you have received an auto insurance cancellation letter, your first step may be to understand why your policy is being canceled and how long you have to find replacement coverage. Your insurance company is required to contact you in advance of any cancellation so that you have time to find a new policy. The amount of notice you get may depend on the regulations in your state.
If your car insurance coverage is dropped, you may want to try the following steps:
- See if your provider is willing to consider reinstating your coverage. “If you can work it out with the insurance company to be reinstated, that’s usually the first step most people want to take,” advises Amy Bach, executive director of United Policyholders, an insurance consumer group in San Francisco.
- Write a letter asking your insurer to take you back. Your state may be able to help. For example, in Illinois, you could seek the help of the Department of Insurance, which holds hearings for insurance appeals.
- Look for a new insurance provider. If the insurance company declines to keep your policy, you may want to begin searching for a new insurance provider by gathering quotes from several carriers. This is why it is important to know when your policy is going to end, so you can get coverage before you have a lapse. A lapse in coverage may be viewed as high-risk behavior that could increase your future car insurance premiums.
What is the difference between a policy cancellation and nonrenewal?
The key difference between an auto insurance cancellation and a nonrenewal is the timing.
Insurance policies are contracts that typically last between six months and a year. At the end of this term, your provider can decide whether or not to offer you a new contract. Nonrenewal means the insurer decides not to offer you further coverage at the end of your term. The provider is usually required to send you a notice of nonrenewal a certain number of days before the end of your policy to give you time to shop for new coverage.
There are many reasons insurers can choose not to renew your coverage, but here are a few of the most common:
- You were cited for drunk driving or other serious driving infractions.
- You have made too many claims, particularly from accidents you caused.
- The company has decided to discontinue offering coverage in your area.
On the other hand, an insurance cancellation means that your policy is canceled at any time other than the renewal date. Cancellations can only happen for very specific reasons. Once you purchase a policy, the insurance company usually has 60 days to decide not to offer you long-term coverage by issuing a cancellation. After that, there are typically only three reasons an insurance policy can be canceled:
- You have not paid your premiums, causing a lapse in coverage.
- You committed fraud or lied on your insurance application.
- Your driver’s license has been suspended.
In the table below, Bankrate’s insurance editorial team has outlined the key differences between policy cancellations and nonrenewals:
|Time frame||Within the first 60 days of coverage or for a specific reason||At the end of your policy term|
|Notice required||Depends on the reason for cancellation||Depends on the state; usually 30 to 60 days|
|Reason for termination||Must be due to nonpayment, fraud or license suspension if after 60 days||Often caused by too many claims, driving infractions or changes in policy offerings|
Can you fight a car insurance policy cancellation?
You can challenge your car insurance company after receiving a policy cancellation notice. You could first call your insurance company to discuss whether your insurer might be willing to keep your policy. Depending on the reason for your cancellation, you may be able to reach an agreement with your carrier.
However, if contacting the company proves unsuccessful, you may want to contact your state insurance department to file a complaint if you believe your policy has been canceled unfairly. Depending on the state, you may be protected from cancellation for specific reasons, such as your age. The state insurance department might investigate to see if the cancellation was justified.
Will it be more difficult to get insurance if you get dropped?
Unfortunately, if your car insurance company drops you from coverage, getting another policy could be difficult and expensive, depending on the reason for your cancellation. The reasons that often lead to the cancellation, such as a license suspension, may be viewed by other insurance companies as evidence of high-risk behavior, which generally leads to higher costs of car insurance.
However, some companies offer high-risk auto insurance, so being canceled for a driving incident does not mean you will not be able to find replacement coverage. Although your premium may be higher if you have accidents, tickets or a DUI conviction, most providers offer discounts that could save you money.
If you are unable to line up a new policy with another insurance company, you may be able to get coverage through your state’s “assigned risk” program. This type of auto insurance is typically available to high-risk drivers who have trouble buying a policy in the private market.
Frequently asked questions
The best car insurance depends on your financial situation in addition to where you live, your personal details, your driving history and your preferences. If you have been dropped from coverage and you are looking for a new policy, you may want to get quotes from several companies to find an option that fits your needs.
Yes, you will likely be able to find coverage again if your carrier dropped your policy. When doing so, it’s important not to intentionally hide your canceled coverage status from your new insurer. Misrepresenting an insurance application can lead to having your policy canceled all over again. If you are unable to find auto insurance coverage from a private carrier, you may need to reach out to your state’s Department of Insurance to discuss your options for coverage.
There are typically only three reasons that an auto policy can be canceled: nonpayment of premiums, insurance fraud or license suspension. However, insurance companies can opt for nonrenewal, which ends your policy at the end of its term, for a wide variety of reasons, from risk avoidance to changing insurance offerings.
How long it takes for an insurance policy to be canceled for non-payment depends on the company and its billing policy. Car insurance companies must notify you prior to canceling the policy. Each state has different notice periods, but it is typically at least 10 and as much as 20 days. You usually have a grace period before the notice goes out, so if you realize you’ve missed a payment, be sure to make it as soon as possible to avoid being canceled for non-payment.