What to Do When Your Car Insurance Drops You (2022)
Updated June 15, 2022
Did your insurance company issue you a cancellation or nonrenewal notice? First of all, don’t panic. You’ll find another insurance policy or work it out with your current insurance company. There are a number of ways you can get “dropped” by your insurance company, and it’s not the end of the world.
But more likely than not, you’ll have to start shopping for auto insurance. If you compare car insurance quotes to help you find an amazing deal, you might come out with better rates and coverage than before your policy cancellation—there’s an opportunity in every crisis.
Car insurance companies issue cancellation and nonrenewal notices for a number of reasons, but the most common is nonpayment.
Your car insurance company has to give you advance warning to find new insurance coverage, so don’t panic or drive without auto insurance coverage.
To get back on your feet, start comparing auto insurance quotes, and you’ll find a policy in no time.
If you’ve received a cancellation or nonrenewal notice from your car insurance company, don’t panic. Contact the company to see if it was a mistake. Then, compare quotes for a new car insurance policy.
If your insurance company sends you a nonrenewal or policy cancellation notice but you don’t know why, you’ll want to call to speak with a representative to figure out the reason you’re being dropped. Here are the common reasons for both.
See More: Best Car Insurance Companies
According to the Insurance Information Institute, after your policy is in effect for 60 days, there are only three reasons that insurance companies can cancel your policy. They are:
Unpaid insurance premiums: Nonpayment is among the most common reasons for policy cancellation. It’s also the most easily fixed, provided you respond in a reasonable time frame and the car insurance company wants you back.
A revoked driver’s license: If your state DMV suspends your license, you’ll be in enough trouble for an auto insurance company to consider a policy cancellation, and most state laws permit them to do so if they see fit.
Falsities on your insurance application: Some state laws permit insurance companies to drop customers who have not been truthful on their insurance applications. Examples include lying about their garaging address or their driving history.
If your insurance provider cancels your policy before the 60-day time frame and it’s not due to one of the above reasons, it’s probably similar to a nonrenewal. But because you haven’t been insured for 60 days, the insurance provider decided to cancel your policy rather than wait out the policy term.
See More: Car Insurance Quotes
You’ve filed a number of insurance claims in rapid succession: Multiple at-fault accidents and other car accidents that produce costly insurance claims might put you over the threshold for the level of risk that car insurance companies want to take on. This is legal for car insurance companies to do at the end of your policy term.
Your driving record or credit score just took a big hit: If you accrue moving violations like a DUI or DWI and/or traffic violations and other tickets over the course of your policy term, many insurance providers will charge you higher rates. But some will decide you’re too high-risk to insure and opt for a nonrenewal.
Something beyond your control: Perhaps your insurance company is just discontinuing insurance coverage in a given area or reducing policyholders of a certain type. You just might be a casualty of a pivot in business strategy. It’s unfortunate, but you hopefully won’t have much trouble finding cheap car insurance to replace it.
When you get a policy cancellation, you are likely to be considered a high-risk driver and pay higher rates. Whatever you do, don’t make things more difficult for yourself by waiting until your policy lapses to secure auto insurance. You can end up with super-high insurance premiums for a lapse in coverage, so do whatever you can to avoid it.
If you have to go without insurance coverage, don’t drive until you have a new car insurance policy. State laws require insurance companies to give you plenty of time to find new insurance before dropping your coverage. Make sure you know when your last day of coverage is, and try not to go without coverage. But if you lose your auto insurance, stop driving.
If you’re caught driving without insurance, you could very well lose your driver’s license. And if companies didn’t consider you high-risk before, they definitely will after that. You may be fined and jailed, and the DMV might take away your registration if you’re pulled over and found to be driving uninsured.
See More: Cheap Car Insurance
If you can come up with the money to pay your car insurance premiums within a certain time, you might be able to reverse your cancellation and get your coverage back. This is typically the easiest way to deal with a problem like this.
Underwriting laws are designed to prevent insurance companies from terminating policies without adequate notice or sufficient reason. But even if your insurance provider isn’t breaking the law, you can appeal to your state insurance department for help.
But remember: if there’s tension like this between you and your insurance company, perhaps it’s not the best car insurance you can get. High-risk drivers can also benefit from insurance policies that are designed to serve them.
Generally, when you receive a notice of cancellation, other insurance companies will place you in a high-risk category and charge you higher premiums. So as you begin a new insurance application to obtain a new policy, it’s more important than ever to shop for all the insurance quotes you can find. There’s a match out there for you, even if this one didn’t work out.
You might experience higher rates after a nonrenewal or policy cancellation. To keep your car insurance rates manageable, the best thing you can usually do is to keep being a safe driver. If you have full coverage, choose a higher deductible. And make sure you’ve scoured the market for the cheap car insurance you deserve.
Ask your insurance agent. If you were dropped for nonpayment, you can typically get your auto insurance policy reinstated after paying your bill. If your car insurance company gives you an unsatisfactory reason for your policy cancellation or nonrenewal, you might be able to work with your state’s department of insurance to file an appeal and get your policy reinstated.
State laws dictate the amount of notice that the insurance company must give you before your coverage actually ends. For nonpayment, this tends to be 10 days, but in other situations, it could be 30 or even 45 days. So you should have time to look for new coverage before your current coverage ends.
Nonrenewals happen when your insurance company decides not to insure you in the next policy period. When this happens, you’ll have more notice, and it may be related to your driving history. Policy cancellations are more abrupt and tend to occur in the first 60 days of coverage during what’s called an underwriting period. They tend to be issued for fraud and nonpayment.
If you’re getting hit with higher rates than you’re used to because of a policy cancellation or nonrenewal, the experience can be really frustrating. Even when it’s car insurance, being rejected can hurt. Finding cheap car insurance again depends on how wide you cast your net. So start looking for quotes, and make sure to compare a lot of different companies.
Data scientists at Insurify analyzed over 40 million auto insurance rates across the United States to compile the car insurance quotes, statistics, and data visualizations displayed on this page. The car insurance data includes coverage analysis and details on drivers' vehicles, driving records, and demographic information. With these insights, Insurify is able to offer drivers insight into how their car insurance premiums are priced by companies.
Charlie Mitchell is a journalist, researcher, and writer specializing in personal finance subjects. He holds a degree from Middlebury College. His work can be found in Vox, Mother Jones, The New Republic, and other publications. Charlie uses his expertise in home, renters, and auto insurance subjects to help inform people to make better financial decisions. Connect with Charlie on LinkedIn.Learn More