Why would my car insurance company cancel my policy?

Why would my car insurance company cancel my policy? The main reasons auto insurance companies drop you are if you don't pay your premiums or if your license has been suspended. If your car insurance company canceled your policy, start comparison shopping online to find affordable coverage. Enter your ZIP code below to compare quotes now.

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Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

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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: Jan 22, 2021

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Here's what you need to know...

  • There are several reasons why your car insurance company could decide to drop your policy
  • The most obvious one is that you don’t pay your premium as agreed
  • Your driving record and a suspended license can also work against you
  • If you obtained your policy through fraud or misrepresentation, you could be dropped

Can your auto insurance drop you? During the first 60 days after your car insurance policy is issued, the insurer has the right to cancel your coverage for any reason that it sees fit.

They may not even have to provide you with a specific reason for canceling your coverage.

After the 60 days are up, the insurance company will likely have to continue to provide coverage for the term of the policy.

When the policy is up for renewal, the company may choose not to offer to insure you for another term.

Read on to understand why auto insurance companies cancel coverage and then find the best car insurance by entering your zip above!

1. Failure to Pay Premiums

 

Your insurance policy is a contract between you and your insurer. The insurance company agrees to provide coverage for you, so long as you pay your premiums as agreed.

If you don’t pay for your coverage, the insurance company can cancel your policy.

Some insurers will allow a customer who has been dropped to pay the amount owing and have the policy reinstated, but the company is not obligated to do so.

Driving without insurance, even for a short time, is a criminal offense.

If you are in an accident, you will not have the protection your insurance policy carries. Your license and registration may be suspended, even if you are not involved in an accident.

In that case, you might end up being dropped by your insurance company anyway.

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2. Poor Driving Record or License Suspension

 

If you are involved in more than one at-fault accident, your insurance company may decide that you are too risky to cover and drop you from its customer list.

In a case where your license is suspended, your insurer may consider you are too risky to cover. Your policy may be revoked if someone in your household has his or her license suspended.

You may be able to keep your policy in place if you agree that the person whose license is under suspension be removed from your policy.

In some jurisdictions, being charged with a DUI/DWI offense means your license is suspended automatically, and dealing with this issue is separate from the criminal charges.

It’s possible to be found not guilty on the charges and still have to wait out the suspension period and a fee to get your license back usually with an SR-22 document.

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3. Fraud or Misrepresentation in Car Insurance

If the insurance company issues a policy and finds out later that you obtained coverage through fraud or misrepresentation, your coverage will be canceled.

Lying about things like how much driving you do may lead to you being dropped by your insurer.

You don’t know how much weight the insurer will give to a single answer on an application for coverage, but dishonest may mean that the insurance company will treat your policy as if it had never existed.

A better choice is to be honest about everything to do with your record, driving habits, and make and model of your vehicle.

Find Car Insurance Quotes

 

If you are concerned about being dropped by your car insurance company or it has already happened, you need to get covered again quickly.

You should shop around to get the best possible rate, no matter what your personal situation is.

You can start by clicking on the free insurance tool on this page to compare pricing from reputable insurance companies.

References:

  1. https://www.directgeneral.com/learning-center/explaining-auto-insurance/what-to-do-when-youre-dropped-from-your-insurance
  2. https://www.thebalance.com/what-is-an-insurance-renewal-527419
  3. http://dictionary.law.com/default.aspx?selected=337
  4. https://en.wikipedia.org/wiki/Motor_vehicle_registration
  5. https://www.nolo.com/legal-encyclopedia/dui-dwi-in-your-state-33049.html
  6. https://www.businessdictionary.com/definition/fraud.html

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