What to Do If Your Car Insurance Policy Is Canceled

If you own or rent a car, the last thing you want to hear is that your insurance policy has been canceled. There are several reasons why your insurance company might cancel your policy, but no matter the justification, there are certain steps you’ll need to take in order to get insured again. It’s critical to note that while a canceled policy doesn’t mean that you won’t get insured again, maintaining continuous coverage is advantageous for getting a cheaper rate, so it’s important to start searching for a new insurer as soon as possible.

Reasons Your Insurer Might Cancel Your Insurance

Insurance companies retain the right to cancel your insurance if you violate their terms and conditions. However, you should know that there is a difference between cancellation and non-renewal. In less serious cases, your insurance company may elect to not renew your policy, but you’ll still have insurance through the end of your term. But if your insurer cancels your policy, you will receive notice of the termination and you will need to find a new provider before your policy ends.

Here are some of the most common reasons why your insurer might cancel your policy.

Non-payment

As part of the terms of your insurance policy, you commit to paying your premium in full and on time at the beginning of each payment period. When you breach these terms, your insurer has the right to revoke your policy. If you realize that you can’t afford an upcoming payment, contact your insurer as quickly as possible and explain your situation. Your insurer will likely be more flexible if you are proactive about letting it know. However, if you’ve made a habit of missing payments, it will be much harder to get your policy reinstated, and you’ll likely need to pay a higher rate due to the lapse in coverage.

Fraud

A far more serious offense than non-payment, committing car insurance fraud is not only a cause for insurance cancellation, but it’s also against the law. Some examples of fraud include falsifying claim documents, incorrectly reporting your vehicle as stolen, or staging a car accident or vehicle theft. If your insurer suspects that you’ve committed fraud, it will launch an investigation and pursue criminal charges if necessary.

Major driving offenses

If you’ve committed a serious driving offense, there is a chance that your insurer will cancel your policy. Typical offenses include having your license suspended or receiving a DUI/DWI. If you receive multiple infractions, your insurance company will almost certainly cancel your policy. Many companies won’t insure you if you have committed several offenses, but there are companies that will; just be prepared to pay a higher premium. In certain cases, you may need an SR-22 to verify your insurance coverage.

Frequent claims

Filing too many claims is another reason why insurers cancel policies; however, this situation is less common than the other reasons listed above. Insurance companies typically won’t immediately cancel your policy for too many claims, but they might decline to renew it or charge a higher premium.

What to Do After Your Insurance Policy Is Canceled

If your insurance is canceled, the good news is that your insurer must provide advance notice, so you won’t be immediately uninsured. While the specific laws vary by state, most companies are required to give you at least 10 days’ written notice before canceling your policy.

If you receive a cancellation notice, you should start shopping around for a new policy right away. If your auto insurance lapses, you could be forced to pay a higher premium when you find a new provider. Plus, if you plan on driving, maintaining liability insurance is legally required in most states.

Contact your insurer

Depending on why your insurance was canceled, you will have several different options when it comes to reinstating your policy. But no matter the reason that your coverage was canceled, the first step is to call your insurance company to get more details regarding the cancellation and understand if you can do anything to reverse it. Less severe cases (such as non-payment) can be quickly remedied by making a payment over the phone.

If your insurer doesn’t reinstate your policy, you’ll have to decide how to proceed. You can appeal the cancellation by contacting your state’s insurance department, but that could take some time to process. In the meantime, look for a new policy to avoid a gap in coverage.

Search for a new company

It may be challenging to find a company willing to insure you, depending on the severity of your infractions. In that case, consider applying for a state-run plan. Because most states require you to have car insurance, state governments provide insurance options for people who can’t afford private policies or who have trouble finding their own insurance.

When shopping for a new policy, potential new providers will review your driving record. So if you have any major driving offenses (such as a suspended license or DUI), you’ll be charged a higher premium. They will also ask if you have had a policy canceled in the past. It’s important to be truthful; otherwise, this is considered car insurance fraud.

FAQ

Will a canceled policy make it harder to get insurance?

In short, yes. You will need to disclose that you have had insurance canceled in the past, which can make insurers wary of providing coverage. However, there are plenty of companies that work with high-risk customers. Also known as non-standard auto insurance, this type of policy is often more expensive, but it offers the basic coverage needed to operate a vehicle.

Where can I find a good insurance policy?

Your best bet is to explore your options on different review sites and to compare quotes from multiple insurers. If you’ve received a DUI, you may find it beneficial to look into DUI/DWI to people with such convictions. If you’re struggling to pay your premiums, check out state-provided insurance options, which are geared toward lower-income families. If you need more resources, including whether to use an agent or to DIY your insurance, check out our top tips.

What factor does my credit score play in calculating my insurance rate?

You’re probably aware of the factors that go into your insurance premium: your age, accident history, vehicle type, and more. But how does your credit score impact your rate? Insurance providers look at what’s known as your “credit-based insurance score,” which includes certain aspects of your credit score and evaluates your creditworthiness as it relates to paying off your debts consistently.

What happens if I don’t have car insurance?

If you continue driving without car insurance, you risk serious consequences; nearly all states require liability coverage, and not having it is against the law. You can get a ticket for driving without insurance, but the consequences are even more severe if you aren’t covered and get into an accident. Even if it wasn’t your fault, you could face fines and restrictions on your license. If it was your fault, the other party can sue for damages. Keep in mind that all of these penalties are strictly monetary. If you or another party is hurt in the accident, you open yourself up to much harsher consequences.

What’s Next?

• Learn what to do if you’re in a car accident during a period of lapsed insurance coverage.
• Understand the basics of SR-22 insurance if your provider requires it.
• Make sure you’re shopping smart when looking for cheap auto insurance following a rate spike.