Can your car insurance company cancel your policy?
Car insurance companies cannot cancel your policy without warning. Car insurance companies can only cancel a policy if you failed to pay your premiums, your license was suspended or revoked, or if you committed fraud on your application or claim. Drivers typically have a grace period of 14-45 days to find new coverage before their existing policy is canceled. Start shopping for a new policy with our free comparison tool below.
Read moreFree Car Insurance Comparison
Compare Quotes From Top Companies and Save
Secured with SHA-256 Encryption
Ty Stewart
Licensed Insurance Agent
Ty Stewart is the founder and CEO of SimpleLifeInsure.com. He started researching and studying about insurance when he got his first policy for his own family. He has been featured as an insurance expert speaker at agent conventions and in top publications. As an independent licensed insurance agent, he has helped clients nationwide to secure affordable coverage while making the process simpl...
Licensed Insurance Agent
UPDATED: Nov 6, 2023
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 car insurance decisions. Comparison shopping should be easy. We are not affiliated with any one car insurance company and cannot guarantee quotes from any single company.
Our car insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different car insurance companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
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.
UPDATED: Nov 6, 2023
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 car insurance decisions. Comparison shopping should be easy. We are not affiliated with any one car insurance company and cannot guarantee quotes from any single company.
Our car insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different car insurance companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
On This Page
- Department of Insurance sets the standards and the policies that insurers must follow in every state
- You have the right to cancel your insurance at any time and for any reason
- Insurance companies do not have the same freedom that the insured does when it comes to cancellation
Car insurance companies do not just offer anyone insurance. A company may offer a quote to anyone who comes along and asks for one, but to actually accept an application and issue a policy is another story.
If a driver has a history of driving recklessly behind the wheel without regard for human life, that driver might find it hard to find a company that is willing to offer them even a minimum amount of liability coverage.
This is because the company will have a strict set of underwriting guidelines that the company must follow when accepted risk.
In all states, the state’s Department of Insurance sets the standards and the policies that insurers must follow and comply with to maintain their license to do business in the state.
Start comparing car insurance rates now by using our FREE tool above! Enter your zip code to get started now!
When can a policyholder cancel their car insurance policy?
As the policyholder and the named insured on your car insurance policy, you have the right to cancel your insurance at any time and for any reason.
You are never obligated to stay with a carrier just because you have a 12-month term or because you still own a car.
It is against the law to drive without insurance.
An insurance carrier can never deny your right to cancel your insurance as long as you follow their rules and request the cancellation in writing.
Compare quotes from the top car insurance companies and save
Secured with SHA-256 Encryption
Backdating Your Cancellation
You are never obligated to tell the insurer why you want to cancel, but you must give a cancellation date in the future.
The reason for a future cancellation date is because insurance is a product that you use as you go.
The only time you can backdate a cancellation request is if you can show your carrier that you have purchased insurance and your coverage overlaps.
An insurance company cannot legally deny backdating cancellation when you are covered by two companies because they would be forcing you into double coverage that you cannot technically use twice.
Benefits of Giving Your Insurer Notice
Your policy might cancel on its own when you do not make payment, but when you have the intentions of letting your insurance lapse it is best if you let your carrier know.
There are several reasons why you can benefit from giving your company proper notice.
Here are some of the biggest reasons why sending a notification or a request to your original insurer can help you avoid specific pitfalls:
– Avoid Paying More Than You Owe
Almost all companies offer their clients at least a short grace period after the due date on their policy to make a premium payment.
This period can last between 24 hours and up to 30 days. If you are paid up further in the policy, you can avoid paying for the automatic grace period that your insurers offer you.
– Being Charged for an Automatic Payment
If you have already set up automatic EFT payments with your insurer and you do not cancel your coverage, you may be charged for your EFT payment because the cancellation was never processed.
Canceling too soon before the payment date may also lead to an unexpected draft. This is why you need to prepare and give advance notice.
Compare quotes from the top car insurance companies and save Secured with SHA-256 Encryption
– Getting a Bad Reputation as a Named Insured
You never want to leave a job without giving notice because you can never return. The same goes when you leave an insurer without giving notice.
You can leave a very bad impression and get a bad reputation when you let your policy cancel for non-payment.
Not only may the company choose not to take you back in the future, other companies may be wary of giving you discounts because they will see a lapse.
Do car insurance companies have the same freedom to cancel?
Insurance companies do not have the same freedom that the insured does when it comes to cancellation.
When an insurer takes on new business, they are given an opportunity to do their homework and to really get a good picture of the risk that they are taking on.
The marketplace is designed to protect the consumer and not the carrier.
After the policy offer is made and the declarations page has been issued, they have used most of their probationary period to find red flags or indications that the policyholder is a bad risk.
Most states allow their licensed carriers to cancel a policy for any reason if the policy has been in force for 60 days or less.
In essence, a probation period that the company has to underwrite and notify the client of information that must be verified.
If there is no reply to a request or the company is not willing to accept finding, they will cancel the policy retroactively and return your premiums to you. When no coverage is provided at all, it is referred to as a rescission.
Compare quotes from the top car insurance companies and save
Secured with SHA-256 Encryption
Reasons for Cancellation
Once the 60 days is up, the insurer has a limited number of reasons why they can order a cancellation.
The 3 reasons include:
- Failure to pay
- Fraud on the application
- Suspended or revoked license
In any other circumstances, a policy cannot be canceled until it comes up for renewal. If a company has decided to non-renew your policy or you are ready to shop for a new plan, it is time to compare premiums and rates.
You can easily and quickly start reviewing rates and do a full comparison by using our comparison tool below! Enter your zip code to get started for FREE!
Compare quotes from the top car insurance companies and save
Secured with SHA-256 Encryption
Ty Stewart
Licensed Insurance Agent
Ty Stewart is the founder and CEO of SimpleLifeInsure.com. He started researching and studying about insurance when he got his first policy for his own family. He has been featured as an insurance expert speaker at agent conventions and in top publications. As an independent licensed insurance agent, he has helped clients nationwide to secure affordable coverage while making the process simpl...
Licensed Insurance Agent
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.