Everyone makes mistakes. And innocent errors or emergencies may lead to a car insurance cancellation. If your car insurance is cancelled, you need to act quickly to fix the situation. In most states, auto insurance is required to drive a car.
Today, we’ll cover some reasons for car insurance cancellation, how cancellations are different from non-renewal notices, what happens when your car insurance gets canceled, and things you should do right away.
Most importantly, remember that you must not drive a car that is not insured! In addition to a lot of monetary responsibility in case of an accident, you could also get an expensive ticket, or even lose your driver’s license. Do not do it!
Reasons for Car Insurance Cancellation
A cancellation notice is not the same thing as a non-renewal notice.
In most states, your car insurance company cannot cancel your policy in the middle of a contract, unless you forget to pay your car insurance premium (your bill for insurance.)
- When that happens, most insurers will provide you with a grace period to pay your bill.
- They usually reach out to you for a payment and send a warning letter or email before cancelling a policy due to non-payment.
If a payment is not received quickly, the insurer can cancel the policy. If your car insurance is cancelled, you can reach out to the insurer and ask for a new policy, or shop for another car insurance policy online.
If you choose to re-instate a policy with your insurer, you’ll need to pay any past due amount, and put some money towards a new policy.
If shopping for new auto insurance, you’ll want to be quick about it and be sure the new policy starts immediately when the old policy ends. You would not want to be driving uninsured by accidentally missing a day between the effective dates of your policies.
There are other reasons an insurer can cancel your policy besides non-payment. If your driver’s license is suspended or revoked, or if the insurer discovers that you lied about something important (like your age or driving history) they could cancel your policy.
What is a Non-Renewal Notice? How Does it Differ from a Cancellation?
Cancellations occur when a policy is stopped mid-contract. Non-renewals happen when an insurer refuses to enter a new contract when your current contract ends.
Non-renewals can happen for several reasons, like:
- Too many tickets or points on your license
- Serious convictions related to your driving, like aggravated vehicular manslaughter
- DUI / DWI / DWAI convictions
- Too many claims filed, even if they weren’t your fault
Non-renewals can happen to great drivers, too. Sometimes an insurer decides they aren’t going to provide car insurance to a particular state anymore.
What Else Happens After a Car Insurance Cancellation?
When your auto insurance is cancelled, there can be other repercussions throughout your life. In many states, the insurer will notify your state department of motor vehicles (DMV). Some states will restrict or suspend your license if you have a car on the road but no insurance for it.
- And if you have a lienholder (the bank you pay a car payment to) they will be forced to purchase insurance on the vehicle, and this cost will get passed on to you!
- Your car payment will either immediately increase, or the duration of your payments may become longer.
Finally, a cancellation can ripple through your other insurance policies, too. Insurers prefer to work with low-risk individuals. You might lose any multi-policy discount or “bundle,” causing your other insurance policies to become more expensive.
Now, let’s answer some of the specific questions we are often asked about car insurance cancellations.
3 Common Questions About Car Insurance Cancellations
“Will my car insurance get cancelled after an accident?”
Most car insurance companies will continue to insure you after a single fender-bender, assuming it was not violent or related to alcohol. Accidents happen, and that’s what insurance is for! Your premiums might increase, though.
If you have a long record of safe driving and have multiple lines of insurance with the company (your homeowner’s insurance, your motorcycle policy, etc.) they will be reluctant to lose you as a customer.
However, if this is your third accident in a few years, or if you did an extraordinary amount of damage, or injured a person badly through dangerous driving, they might non-renew your policy.
“Can my car insurance be cancelled if I lie about my age?”
Absolutely! Know that insurance companies want to deal with honest, reasonable customers. Dishonest customers present a moral hazard. Put another way, if you lie about your age, you might be doing other dishonest or unreliable things.
“Why does age matter to my insurance company?”
Auto insurers operate by dividing customers into risk groups based on age, gender and driving history. This makes sense, as an 18-year-old male is less experienced and more likely to take risks than a 40-year-old-male. In some states, they can also consider your credit rating when establishing your risk levels.
- When a customer misleads the insurer about their age, it causes problems for their entire rate plan.
So, if you mislead an insurer to think you’re 18 when you’re only 16, or 21 if you’re only 20, they can cancel your policy when they discover the misinformation. (And trust us, they will discover it.)
But young people are not the only ones to attempt to mislead an insurer. Older individuals might try it, too, because seniors sometimes pay more for car insurance. Visit car insurance for seniors to learn more.
Our best advice is to be perfectly honest when getting a quote for car insurance. It helps to have some paperwork handy as well.
Things to Know When Shopping for Car Insurance After a Cancellation
If you are shopping for car insurance after a cancellation, you might need a few documents at hand.
As we mentioned earlier, cancellations and non-renewals are different animals. If your insurer is non-renewing your policy because they are quitting your state, that is not your fault. Just let the agent know your policy has been “non-renewed.”
But if your car insurance was cancelled due to a misrepresentation, or because you lost your license, you should have documents ready to show the new insurer.
Remember, all insurance companies communicate with one another. They might not know about your claims history today or DUI today, but they will find out in a matter of weeks. So be ready with claims dates, amounts paid, license reinstatement information, VIN numbers, and so on.