Can I cancel my car insurance after an accident?

You can cancel your car insurance after an accident but your policy must be active the day of the accident to receive coverage. Any gap in coverage can result in fines and/or higher future rates.

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A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Sep 15, 2021

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Here's what you need to know...

  • Car insurance is a Property and Casualty policy that protects you against property losses and liability losses
  • If you have an accident, you can file a first-party claim against your policy or a claim with the other company
  • If you have an accident, you must have active coverage at the time of the loss to report a claim
  • Companies must honor claims as long as the policy was active on the date that the accident happened
  • If your car is totaled and you don’t have a new one, you can cancel your insurance and still get your settlement

As a child, you quickly learn the importance of having car insurance when you’re playing the ever-popular game called Life. This game shows and proves that you never know when you’re going to get into an accident.

Life might just be a game, but it teaches young players a very important lesson. You don’t just have to buy insurance for your vehicle, you need to buy insurance for your vehicle. Taking care of yourself and your property is a serious topic. And while it may seem like it’s only an option, it is in fact a necessity. There are too many risks that come with not having some type of coverage.

If you get into an accident, knowing how your insurance company is going to help you after you file a claim could make all of the difference.

Compare car insurance companies side-by-side today and see how much you could save. Enter your zip code above to get started!

When should you file a claim to your car insurance for benefits?

If your car has a small scratch or you have a dent from a runaway rock flying through the air, you might not need to file a claim for benefits.

You can either pay to repair the minimal damage on your own or you can live with the fact that your car will get bumps and bruises over time. An insurance policy shouldn’t be taken lightly, but some people may not know these things, and rush to file a claim for something as little as a minor scrape.

It’s when you have an accident or you discover significant damage that you should consider filing a claim with your carrier. Filing a claim can be a time consuming process; knowing when to file can save you from a headache

You can only file a first-party claim against your policy when you have first-party coverage.

If you have only a basic policy with liability coverage, you can’t request benefits under your insurance but you should still tell your insurer about the accident to protect yourself.

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What happens if another driver is at fault for the accident?

If you crash and you’re not at fault for the accident, you will file a third-party claim against the other party’s insurance in order to receive payment for the damages or medical bills associated with the accident.

Instead of contacting the other driver’s company directly, you should call your agent and give the claims department the details.

After you file the claim on your end, your adjuster will communicate with the other carrier.

Your claims adjuster will compare your statement to statements made by other drivers involved.

After everything has been investigated, the fault decision will be made on both sides. It only drags a claim out when the companies can’t agree on the fault determination. This is generally because an insurance provider wants to prevent any sort of hike in costs. The more high-risk a driver becomes, the higher their insurance premiums will be. And even though a company ultimately wants to turn a profit, they would lose customers if they end up paying more than those people can afford.

Your Policy Must Be Active At the Time of the Accident

If the insurance company finds that you’re more than 50 percent at fault for the accident, you can’t file a claim as a third-party claimant.

You’ll have to collect against first-party coverage options if you want to recoup for your financial loss.

Some of the coverage options that you can collect against include:

  • Comprehensive – pays for your vehicle repairs after a fire loss, a theft, a flood loss, or another non-moving peril
  • Collision – pays to repair or replace your car after it’s damaged while your vehicle is being operated
  • Medical Payments – pays for your medical bills if you’re injured in a vehicle-related accident
  • Uninsured Motorist Protection – pays for your medical bills and rehabilitation costs when someone who doesn’t have insurance hits you

As long as your insurance policy is in effect on the day of the loss, your insurer is obligated to pay out benefits to you.

Your policy could be set to cancel in the upcoming days or it could be paid in full and you’ll receive the same amount of money under the policy either way.

Can you request that your policy is canceled after you file an accident claim?

There’s no sense in paying to insure a car that you’re selling to the insurer after it’s totaled.

While this is a scenario where you should cancel your policy, it’s not always advisable to cancel your coverage.

Many experts recommend staying with the same carrier until the claim is closed just so that there aren’t any unreasonable delays.

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What are some of the consequences that might arise after cancelling your policy early?

Your accident claim will be covered regardless of what you decide to do with your policy. Having your claim paid in a timely manner isn’t the only thing you have to worry about.

Here are some of the consequences that you should be aware of before you cancel your insurance after an accident:

  • You legally have to keep insurance on your car until you sign it over to the insurer (even if it’s a total loss)
  • If you cancel insurance on your car and it’s still in your name you could be fined by the DMV
  • If you still drive your car and you don’t have insurance you could be cited or have your car impounded
  • If you have a lapse in coverage, your future insurance rates could go up

You have the right to cancel your insurance at any time. You can even cancel your policy after an accident without it affecting your claim. However, cancellation fees are very real, and so are the consequences of not having continuous coverage. Keeping your current policy active ensures that nothing can happen to your driving record while you’re going through a claim.

That being said, if you’ve given proper cancellation notice once everything is finalized, you will maintain your clean driving record and won’t run any risk of being fined or having the vehicle in question taken from you. Plus, you’re then free to look into other options without any sort of rate increase from your current provider. Just keep in mind that you don’t want to take too long to find a new policy – driving while uninsured can lead to consequences. Set up a time frame for yourself, look around for an affordable rate, and keep yourself safe on the road.

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