Can Your Car Insurance Company Drop You? What to Know About Cancellation

An insurer can cancel your auto policy for something serious like a DUI conviction, or if you don't pay your bill. But they must notify you first.

Daria Kelly Uhlig
Daria Kelly Uhlig
  • Licensed Realtor with 10+ years in personal finance content

  • Contributor to Nasdaq and USA Today

Daria is a licensed Realtor and resort property manager specializing in personal finance, real estate, and insurance topics. In her spare time, she practices photography.

Featured in

media logomedia logomedia logomedia logo
Ashley Cox
Edited byAshley Cox
Headshot of Managing Editor Ashley Cox
Ashley CoxManaging Editor
  • 7+ years in content creation and management

  • 5+ years in insurance and personal finance content

Ashley is a seasoned personal finance editor who’s produced a variety of digital content, including insurance, credit cards, mortgages, and consumer lending products.

Featured in

media logomedia logomedia logomedia logo
Daniel Roccato
Reviewed byDaniel Roccato
Headshot of industry expert Daniel Roccato
Daniel RoccatoAdvisor
  • 30+ years in financial services

  • Clinical Professor of Finance, University of San Diego

Dan is a well-recognized and widely quoted financial services expert, regularly appearing in a variety of national and local media as a subject matter expert.

Updated January 17, 2024 at 4:00 PM PST

Save up to $717 by comparing quotes from the top 100+ insurance companies

Secure. Free. Easy-to-use.
Based on 3,806+ reviews
4.8/5
Shopper Approved
ProgressiveLiberty MutualTravelers
Advertiser Disclosure

At Insurify, our goal is to help customers compare insurance products and find the best policy for them. We strive to provide open, honest, and unbiased information about the insurance products and services we review. Our hard-working team of data analysts, insurance experts, insurance agents, editors and writers, has put in thousands of hours of research to create the content found on our site.

We do receive compensation when a sale or referral occurs from many of the insurance providers and marketing partners on our site. That may impact which products we display and where they appear on our site. But it does not influence our meticulously researched editorial content, what we write about, or any reviews or recommendations we may make. We do not guarantee favorable reviews or any coverage at all in exchange for compensation.

Why you can trust Insurify: Comparing accurate insurance quotes should never put you at risk of spam. We earn an agent commission only if you buy a policy based on our quotes. Our editorial team follows a rigorous set of editorial standards and operates independently from our insurance partners. Learn more.

Auto insurance is vital for protecting your finances if you’re involved in an accident, but your car insurance company can drop you in certain circumstances. With cancellation, the insurer terminates the auto policy currently in effect. With nonrenewal, you retain your existing coverage until the expiration date, but the insurer won’t renew the policy for an additional term.

Most states require drivers to carry liability insurance. Driving without insurance can cost you your driver’s license, result in fines, and risk your financial wellbeing, so losing coverage is likely to leave you scrambling to find a new insurance policy.[1]

The best way to avoid this situation is to understand the reasons for cancellation and nonrenewal. But even in a worst-case scenario, you'll be able to compare car insurance quotes to find a new policy.

Quick Facts
  • 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.

  • A cancellation or nonrenewal can drive up your rates, but only if it’s based on a reason within your control.

Cancellation vs. nonrenewal: What’s the difference?

Cancellation and nonrenewal both result in a loss of coverage, but they occur for different reasons and can affect future coverage in different ways.

  • Policy cancellation: When an auto insurance company cancels a policy, it terminates the policy before it has expired. Say, for example, your current policy begins on Jan. 1 and expires on June 30. A termination between those dates would constitute a cancellation.

  • Policy nonrenewal: Nonrenewal is different. Using the same Jan. 1 through June 30 example, a nonrenewal would keep your current car insurance coverage in place until June 30. Come July 1, you’d need to have a new policy in place or else you’d be uninsured.

The insurance company must notify you before canceling your policy or electing not to renew it. However, specific notification requirements vary according to state law. In New York, for example, the insurer must notify you at least 15 or 20 days before the cancellation date, depending on the reason, or 45 to 60 days before a nonrenewal.[2]

Find Affordable Car Insurance

Liability policies start as low as $21/mo.

Secure. Free. Easy-to-use.
Based on 3,806+ reviews
4.8/5
Shopper Approved
ProgressiveLiberty MutualTravelers

Common reasons insurers may cancel your policy

Your insurer can cancel your policy for any reason in the first 60 days. After that, it must have a valid reason.[3] Common reasons include:

  • Unpaid insurance premiums: Nonpayment is among the most common reasons for policy cancellation. It’s also the most easily fixed, provided you pay your car insurance premium in a reasonable time frame.

  • A revoked or suspended driver’s license: If your state revokes or suspends your license, the insurance company can cancel your policy.

  • Fraud or misrepresentation on your auto insurance application: Your insurance company can cancel your auto insurance if you made false or misleading claims on your application. Examples include lying about your garaging address or driving history.

  • DUI conviction: In some states, a conviction for driving under the influence could result in your insurance company canceling your coverage.

  • Serious or excessive traffic violations: Even if your state doesn’t allow insurers to cancel policies because of too many accidents or tickets, it might suspend or revoke your driver’s license. Your insurer could drop you as a result.

Learn More: How Long Does a DUI Stay on Your Record?

Learn More: How Long Does a DUI Stay on Your Record?

Common reasons insurers may not renew your policy

Insurers usually aren’t required to renew your insurance policy, although some states limit unrestricted nonrenewals to policies that have existed for a short period of time — less than two years, for example. Prior notice is always required; state law might also require the insurer to provide a reason.

Some potential reasons for nonrenewal relate to your driving history, while others are beyond your control:

  • Unpaid premium on a renewing policy: Just as nonpayment of a premium gives insurers a valid reason to cancel your policy, failure to pay the first premium can keep the policy from renewing.

  • 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 your insurer wants to take on.

  • A big hit on your driving record: If you accrue moving violations — like a DUI, traffic violations, and other tickets — over the course of your policy term, your insurer might decide you’re too high-risk to insure.

  • A lower credit score: Insurers typically view drivers with lower credit scores as more likely to file insurance claims. A dip in your credit score increases your risk to the insurer and could lead it to drop you.

  • Your insurer no longer offers policies in your area: Your nonrenewal could be due to a change in your insurer’s business strategy.[4] If your insurer stops providing insurance where you live, you’ll need to find a different one.

How getting dropped can affect insurance rates

Whether being dropped by your auto insurance company affects your rates — and by how much — depends on the circumstances of your policy cancellation or nonrenewal.

If, for example, the insurer didn’t renew your policy because it no longer issues policies in your area, the nonrenewal is no reflection on you. The policy you ultimately purchase from a new insurer might have a different premium than the nonrenewed policy had, but the nonrenewal won’t have been a factor.

Alternatively, cancellation or nonrenewal for cause could have a significant effect on the rates you pay for future coverage if the reason makes you riskier to insure. Say, for example, you have collision coverage and are at fault in an accident that results in a total loss. In addition to the accident prompting a nonrenewal with your current company, your claims history might cause your new insurer to charge you a high rate.[5]

Check Out: Why Do Car Insurance Companies Deny Claims?

Check Out: Why Do Car Insurance Companies Deny Claims?

What to do if your insurer drops you

A car insurance cancellation or nonrenewal notice is a scary thing to receive, but it doesn’t always mean you’ve lost your policy for good. Even if your current policy can’t be salvaged, you have options for purchasing new coverage:

  1. Determine the reason for the cancellation or nonrenewal. A cancellation notice will include the reason the policy is being canceled, and a nonrenewal notice might, too. But it’s a good idea to call the insurance company and speak with an agent who can provide a detailed explanation and answer any questions you might have.

  2. Correct mistakes. Perhaps the notice was triggered by an overlooked payment or an innocent error on your application. Ask your insurance agent if making the payment or correcting the error will allow the insurer to reinstate your policy.

  3. Read the cancellation or nonrenewal notice carefully. The notice should state the date your coverage ends. That’s vital information — you’ll need to purchase new coverage by that date if you can’t get your current policy reinstated or renewed.

  4. Shop for a new policy. As you shop for rates, watch for discounts you might qualify for, such as for having multiple policies with the same insurer, having a positive driving history, or driving infrequently or for short distances.

  5. Secure new coverage. It's important that you secure a new policy before your current one ends. A lapse in coverage can negatively affect your rates in the future.

  6. Correct behaviors or issues that contributed to the situation. For example, if your insurer dropped you because of excessive moving violations, completing a driving safety course might convince your new insurer that you’re now less risky to insure.

Find Affordable Car Insurance

Unlock savings and discounts when you compare quotes

Secure. Free. Easy-to-use.
Based on 3,806+ reviews
4.8/5
Shopper Approved
ProgressiveLiberty MutualTravelers

Car insurance cancellation and nonrenewal FAQs

Driving without insurance can have serious consequences, especially if you’re in an accident with lapsed coverage. The better informed you are, the better you’ll be able to replace your canceled or nonrenewed insurance with a new policy with no gap in coverage.

  • Can insurance companies drop you for no reason?

    In some cases, yes. An insurer can cancel your policy without reason in the first 60 days the policy is in effect. It also can opt for nonrenewal, although some states restrict nonrenewals after a customer has maintained a policy with the insurer for a specific period with no interruptions.

  • Is it difficult to get new insurance after being dropped?

    The level of difficulty will depend on the reason you were dropped. If it was no fault of your own — if the insurer stopped offering policies in your area, for example — you shouldn’t have trouble finding new insurance. If, on the other hand, you were dropped because of a DUI conviction or for filing multiple claims, you could have trouble getting new insurance. However, your state might offer plans that cover difficult-to-insure drivers.

  • How much time do you have to get a new auto insurance policy?

    The amount of time you have depends on whether your policy is being canceled or nonrenewed and your state’s notification requirements. Arizona only requires 10 days’ notice, for example, for reasons other than nonpayment, and Missouri requires 15 days. Residents of other states typically get at least 30 days’ notice, according to United Policyholders, a consumer advocacy group.

  • What happens if you drive without insurance?

    The penalties for driving without insurance can be steep, especially if you’re in an accident — whether or not the accident is your fault. If it is, you could be on the hook for all the losses, including injuries. Even if you’re not at fault, you may still have to pay out of pocket for your own damages.

    Additional consequences include suspension of your driver’s license and a penalty for reinstatement, fines, and repossession (if you’re financing or leasing your vehicle).

Sources

  1. Insurance Information Institute. "Is it legal to drive without insurance?." Accessed May 19, 2023
  2. New York Department of Financial Services. "Cancellation and Nonrenewal." Accessed May 19, 2023
  3. National Association of Insurance Commissioners. "A Consumer's Guide to Auto Insurance." Accessed May 19, 2023
  4. Insurance Information Institute. "What's the difference between cancellation and nonrenewal?." Accessed May 19, 2023
  5. Insurance Information Institute. "What determines the price of an auto insurance policy?." Accessed May 19, 2023
Daria Kelly Uhlig
Daria Kelly Uhlig

Daria Uhlig is a freelance writer and editor with over a decade of experience creating personal finance content. Her work appears on USA Today, Nasdaq, MSN, Yahoo Finance, Fox Business, GOBankingRates and AOL. As a licensed Realtor and resort property manager, she specializes in real estate topics, including landlord, homeowners and renters insurance. In her spare time, Daria can be found photographing people and places on Maryland's Eastern Shore. Connect with her on LinkedIn.

Ashley Cox
Edited byAshley CoxManaging Editor
Headshot of Managing Editor Ashley Cox
Ashley CoxManaging Editor
  • 7+ years in content creation and management

  • 5+ years in insurance and personal finance content

Ashley is a seasoned personal finance editor who’s produced a variety of digital content, including insurance, credit cards, mortgages, and consumer lending products.

Featured in

media logomedia logomedia logomedia logo
Daniel Roccato
Reviewed byDaniel RoccatoAdvisor
Headshot of industry expert Daniel Roccato
Daniel RoccatoAdvisor
  • 30+ years in financial services

  • Clinical Professor of Finance, University of San Diego

Dan is a well-recognized and widely quoted financial services expert, regularly appearing in a variety of national and local media as a subject matter expert.

Compare Car Insurance Quotes Instantly

Secure. Free. Easy-to-use.
Based on 3,806+ reviews
4.8/5
Shopper Approved
ProgressiveLiberty MutualTravelers

Latest Articles

View all