When does a car insurance company drop you?
A car insurance company cannot drop you without warning, but when a car insurance company drops you usually depends on how many claims you've made and whether or not you've paid your premiums on time. Car insurance companies will also drop high-risk drivers if they cannot provide high-risk car insurance coverage. If your car insurance company drops you, don't let your coverage lapse. Enter your ZIP code below to find new coverage from local car insurance companies.
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Written by
Jessica Sautter
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Reviewed by
Chris Harrigan
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UPDATED: Sep 23, 2020
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- Car insurance companies can drop policyholders for almost any reason during the probationary period
- Cancellations generally occur due to major infractions, including failing to pay your premium and getting into too many car wrecks
- Nonrenewals occur at the end of your policy and can be due to a variety of reasons
- If your insurance company plans to drop your insurance coverage, they must provide you with notice
- If you have recently received a nonrenewal or a cancellation letter, you can quickly find a new policy by taking advantage of a comparison tool
Insurance companies are subjected to various rules and regulations in accordance with the state where they operate.
In general, insurance companies can drop policyholders for almost any reason within the first 60 or 90 days of the policy, which is called the probationary period.
Once you are past the probationary period, the insurance company must have a valid reason to cancel your policy mid-term.
If your insurance company has canceled or provided you with a non-renewal letter, you can quickly find a new policy by using a comparison tool. Use our free comparison tool today and start saving!
Cancellations Versus Nonrenewals
Insurance companies can drop your coverage by issuing a cancellation letter or a nonrenewal letter. A cancellation can occur at any time, though your insurance company must provide you with a reason.
Common reasons for cancellation include not paying your monthly premium, participating in or committing insurance fraud or having your driver’s license revoked or suspended.
A nonrenewal occurs at the end of your policy term. This type of letter simply states that the insurance company is electing to not renew your policy. The reasons are varied.
- You may have gotten into too many accidents
- You may have been late on your payment
- The insurance company has stopped issuing your specific policy
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Reasons Insurance Companies Drop Policy Holders
When an insurance company wishes to drop your insurance coverage, they must provide you with written notice.
If they wish to drop you in the middle of your policy, they must provide you with a certain amount of time before you lose insurance coverage.
This gives you time to find another policy via an insurance comparison tool.
- Lying on the application – Common items that driver’s lie about include how many drivers actually drive the vehicle, where they live, the number of miles driven and the number of traffic infractions they’ve had over the last three years.
- Insurance fraud – Insurance fraud occurs when you deliberately lie to an insurance company about a claim or the damages incurred during the accident or incident. If you are caught committing insurance fraud, you could be criminally prosecuted and lose your insurance coverage.
- Suspension or revocation of your driver’s license – If your driver’s license is suspended or revoked due to DWIs or DUIs or driving exceptionally recklessly or another type of infraction, your insurance company may cancel your policy.
- Filing too many claims – If you file too many claims, your insurance company may decide you are no longer worth the risk. This can result in your insurance being either canceled or not renewed.
- Not paying your premium – Forgetting to pay your car insurance every month is the biggest reason insurance companies drop policyholders. If this is the reason your car insurance company is canceling your policy, you may be able to work with them to catch up your payments.
Getting a New Policy After a Cancellation or Nonrenewal
If you get a letter from your insurance company stating that they are canceling your insurance policy or failing to renew it, you can shop for a new policy with help from a car insurance comparison tool.
The tool will allow you to put in all of your information and car insurance needs so that you can find policies that align with your driving habits and your personal budget.
Once you write your perfect policy, you can immediately purchase it online.
Use our free comparison tool now and see how much you could save on car insurance.