Why Do Car Insurance Companies Cancel Policies?
Car insurance companies are only allowed to cancel policies for a few specific reasons and under very limited circumstances. If you find yourself facing car insurance cancelation, it’s good to know your rights and understand how to find a new policy.
Why a car insurance provider might cancel your policy
Insurance providers retain the right to cancel existing insurance policies after 60 to 90 days of coverage, but can only do so in a few circumstances. In order for your provider to cancel your policy, you must violate the terms and conditions in your original contract in one or more of the following ways:
License suspension: If your license is currently suspended or has ever suspended, this indicates to insurance providers that you are an irresponsible and/or risky driver, which gives them the right to drop you as a client.
Fraud or frequent insurance claims: Any outright lies or misleading statements listed within your insurance agreement count as fraud. Be sure that you thoroughly read through and understand the initial contract before verifying the information through the act of signature. If you begin to file more claims as a result of fraud or other incorrect information, your insurance provider reserves the right to cancel your plan.
Non-payment or frequently late payments: Though this one is a bit of a no-brainer, it is important to note that paying your bill(s) on time is the simplest way to build trust with your insurance provider. Falling behind on payments is a simple but effective way to damage this trust until it is fully severed by a canceled policy agreement.
Major moving violations (such as DUI/DWI): Driving while drunk or under the influence is a sure-fire way to get your insurance policy revoked.
Only major infractions that significantly increase your risk as an insured party can cause an insurance provider to preemptively cancel your plan, so try to limit these listed occurrences to stay in your insurance provider’s good graces.
Know your rights
Regardless of why your insurance policy was canceled, it’s important to understand your rights before moving forward. Here are some final things to know.
Your insurance provider must give you notice before canceling your policy: As specified in your original insurance agreement, your insurance provider must always inform you of why your policy is being terminated. Though the exact amount of time varies, you should typically receive 10 days notice that your policy is being canceled so you have the opportunity to dispute the termination or find a new insurance provider.
Lapses in insurance are a red flag, so keep it current: In most states, it is illegal to drive without car insurance. If your policy is unexpectedly canceled, you should quickly secure a new plan to avoid a lapse in coverage and reduce the likelihood of receiving another blemish on your insurance record.
You can find an insurance provider that specializes in risky drivers: If you’re unable to find an affordable insurance plan as a result of your recent policy cancelation, you should consider purchasing a plan from a provider who specializes in risky drivers, such as The General, Titan, or your state’s insurance option for at-risk drivers. Though it may seem detrimental to leave the pool of major insurance companies, if you improve your record over time, you will be able to return to it before you know it.