There are probably worse messages you could receive in the mail – a notice of an IRS audit comes immediately to mind – but learning that your auto insurer won’t provide coverage for you vehicle is no valentine, either. Here’s what you need to know about the auto insurance policy cancellation and auto insurance policy non-renewal, and what you can do in either instance.
News flash: It’s still a free country where auto insurance is concerned. Yes, most states require that you carry some type of auto insurance coverage, but you have the right to cancel your policy anytime you want (although doing so before the policy expires may carry some cash penalties, depending on your carrier and terms). Your insurance provider has the same right, although different state laws dictate the circumstances and requirements for dropping you.
Non-renewal, from the insurance company’s point of view, means they won’t be covering you once the policy has expired. State laws don’t always spell out the conditions under which you can be non-renewed, but insurers typically take this course when you’ve made too many claims for at-fault accidents, collected too many moving violations within the past 3 to 5 years or got convicted of driving under the influence. It could also be that they’ve decided not to sell automobile coverage anymore. If your auto insurance policy won’t be renewed, your provider must give you between 10 and 30 days notice (depending on where you live). They don’t have to tell you why, but if you’re curious you need to send them a written request. If you think the reason is unfair, you can discuss it with the provider’s consumer affairs department or contact your state’s insurance commission. In the meantime, you should be shopping for auto insurance quote before your coverage lapses.
Learning that your auto insurance has been cancelled is much more serious and, as a result, isn’t something your provider can do on a whim. Most state laws are very specific about when a company can cancel your auto insurance. All insurers have the right to cancel you at any time for any reason during the binding period. This is typically within 60 days after accepting your application while they’re assessing your risk. Cancellation during the binding period usually means a black mark has been uncovered on your driving or credit record. The insurer can also cancel you at anytime if your license is suspended, revoked or expires, if you don’t pay your premium on time or if you lie about your driving record, claims history or other facts on your application. State laws require that they give you written notice of cancellation, and vary about the length of time (usually 10 to 30 days) before the cancellation kicks in. All states require that the insurer tell you in that notice why your auto insurance is being cancelled. If non-payment is the problem, contact your insurer ASAP, make the payment and set up an auto payment plan. Unless you’re a repeat offender, your policy will probably be reinstated. If fraud or your driving record is the reason, be prepared to shop for auto insurance as a high-risk driver. Somebody out there will sell you auto insurance, but be prepared to pay the higher premium that comes with being a high risk.