Getting New Car Insurance After Your Policy is Canceled

Within most states, car insurance companies have the right to cancel a policy at any time under certain circumstances.

And while most insurance companies reserve this right, all states in the U.S. do require drivers to carry the minimum requirements in car insurance coverage.

Finding a company willing to insure someone who’s been cancelled or dropped may be difficult, but not impossible.

In most cases, the reason for a policy cancellation carries a lot of weight regarding how hard it will be to find new insurance coverage.

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Car Insurance Cancellation

Car insurance companies can cancel a person’s policy for any reason within the “binding period,” which is usually 60 days from policy’s start date. Grounds for cancellation during this time include:

• Falsifying information listed on the application for insurance
• Not listing a prior driver’s license suspension or revocation

Policy cancellations occurring after the binding period usually result from:

• Failing to pay monthly or quarterly premiums on time
• Multiple traffic violations
• Multiple accidents or claim filings
• Suspended or revoked driver’s license privileges

Once a company issues a cancellation notice, policyholders usually have anywhere from 30 to 60 days before their insurance coverage expires depending on how the premium payment schedule is set up.

This article will help you know what to do after you receive a cancellation notice.

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Insurance Options

Prospective car insurers view a policy cancellation as a serious matter simply because someone who’s been canceled becomes a high-risk candidate. Being labeled as high-risk can makes trying to purchase new car insurance challenging in the least.

In some instances, an insurance company may consider reinstating a canceled policy, though it’s not uncommon for the insurer to require a year’s worth of premiums upfront before agreeing to reinstate.

Insurers are less likely to consider reinstatement for cancellations due to more serious violations.

When shopping for new insurance coverage, one of the first questions asked is if any policy cancellations exist on a person’s record within the past five years, so there’s no getting around the issue at hand.

First and foremost, a prospective insurer will want to know why the person was canceled by their former insurer.

After receiving a policy cancellation notice, it’s important to research new companies as soon as possible to avoid ending up with a gap or lapse in coverage.

A lapse in coverage has many negative consequences and will actually increase a person’s risk profile in the eyes of a new insurer, so avoid these at all costs.

High-Risk Insurance

Many specialty car insurers offer high-risk coverage for people unable to qualify for standard insurance coverage.

These policies are typically much more expensive than standard coverage because of the added risk insurers take on by insuring a high risk driver.

And while being canceled for non-payment of premium has little to do with a person’s actual driving record, the cancellation in and of itself places drivers in a high-risk category.

High-risk insurers also specialize in covering drivers with:

• Multiple traffic violations
• Accidents
• Those with DUIs or DWIs on their records

Since premium rates run so much higher with high-risk insurers, it’s especially important to obtain quotes from different companies as soon as possible.

Getting quotes from several, different companies makes it easier to find the best premium rate and type of coverage that best suits a person’s insurance needs.

You can avoid being put in the high-risk category if you know how car insurance companies calculate risk.

License Suspensions

A DUI conviction will have a tremendous effect on your car insurance policy. State laws require a driver’s license be suspended or revoked depending on the number of occurrences.

Drivers whose policies are canceled due to a license suspension will most likely have to seek out high-risk insurance coverage when shopping for a new insurance company.

Because of the nature of the offense (DUI), most states require an additional form of auto insurance coverage when a license suspension appears on a drivers record — a type of supplemental insurance known as SR-22.

Before getting new insurance coverage, drivers must submit an SR-22 form to their state’s license bureau along with a penalty fee payment in order to reinstate licensing privileges. The form allows drivers with suspended licenses to obtain SR-22 coverage, which protects their licensing privileges.

Many high-risk specialty car insurers offer SR-22 policy coverage in addition to any required collision and comprehensive coverage.

Drivers required to obtain SR-22 coverage must maintain their insurance coverage or risk having their licensing privileges revoked again.

It may also be possible to purchase SR-22 supplemental coverage from a person’s existing insurer provided the company is willing to reinstate the cancellation and issue a high-risk policy in its place.

In either case, car insurance costs will most likely be considerably higher than they were before the cancellation occurred.

If you’re a high-risk driver in need of the best and most affordable auto insurance, start comparison shopping today by entering your ZIP code below!