Jessica Sautter is a Content Writer for CarInsuranceCompanies.com with a Bachelor’s Degree from Eastern Michigan University in Elementary Education with a Major in Reading and a Minor in Mathematics.

Full Bio →

Written by

Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

Full Bio →

Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager

UPDATED: Oct 15, 2020

Advertiser Disclosure

It’s all about you. We want to help you make the right car insurance coverage choices.

Advertiser Disclosure: We strive to help you make confident insurance decisions. Car insurance comparison shopping should be easy. We partner with top car insurance companies. This doesn’t influence our content. Our opinions are our own.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.

Key takeaways...

  • There are multiple reasons why your car insurance may be canceled
  • Why your car insurance was canceled may put you in the high-risk category
  • High-risk coverage is available but at a higher cost
  • SR-22 is the best option for those who had their driver’s license revoked/suspended and consequently their insurance as well

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.

Are you in need of better and affordable car insurance? Enter your ZIP code above and compare at least three to four policies today!

Table of Contents

Car Insurance Cancellation

adobestock_49125004-1600x1600

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.

Compare quotes from the top car insurance companies and save

 Secured with SHA-256 Encryption

Insurance Options

AdobeStock_64564224-1600x1600

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.

Compare Car Insurance Companies

Compare quotes from the top car insurance companies and save

 Secured with SHA-256 Encryption

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

adobestock_74412712-1600x1600

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:

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

adobestock_51451748-1600x1600

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!

References:

  1. https://www.thebalance.com/maximum-number-of-car-insurance-claims-527117
  2. https://www.thebalance.com/what-is-a-high-risk-driver-527253
  3. https://www.moneytalksnews.com/14-traffic-tickets-that-raise-insurance-rates/
  4. http://www.huffingtonpost.com/allan-smith/how-accidents-can-affect-your-auto-insurance-rate_b_8506984.html
  5. https://wallethub.com/edu/dui-insurance/13542/
  6. http://alcoholism.about.com/od/dui/a/dui_insurance.htm
  7. http://www.finweb.com/insurance/what-is-sr22-insurance.html#axzz4sg7RLmAP