What can I do if my car insurance is canceled?
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UPDATED: Mar 19, 2020
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- Contact your insurance provider to find out why your coverage was canceled
- If possible, start shopping around for new coverage before your current policy lapses
- Consider an automatic payment deduction each billing cycle
Car insurance is a necessity in today’s world, especially with our daily reliance on cars. With the increased amount of vehicles on the road, accidents are going to happen. What can you do, though, if your car insurance is canceled?
Figuring Out Why Your Coverage Was Cancelled
One of the biggest things to do when your car insurance is canceled is to figure out why it was canceled.
There are a number of reasons that attribute to cancellations, including:
- nonpayment of insurance premiums
- late payments
- failing to renew on time
- multiple traffic violations or accidents
- non-renewal by the insurance provider
- technical mistakes
In most of these situations, the existing insurance provider may be unwilling to reinstate the previous car insurance policy. The National Association of Insurance Commissioners (NAIC) offers a complete guide to auto insurance, including cancellations or losing a policy, on their website.
Other than a technical mistake by your insurance provider, the reasons for a canceled car insurance policy are normally within the policyholder’s realm of control.
For instance, failing to pay your premiums on time, or at all, can often lead to a cancellation of your car insurance policy.
Finding ways to ensure your payments are made on time, based on whatever schedule has been agreed to between you and your insurance provider, can help to lower the chance of a cancellation due to nonpayment or late payments.
Failing to renew your policy can sometimes lead to a cancellation as well, depending on what agreement you have set up with your provider.
The easiest way to avoid this situation is to have a clear understanding of what is required on your end when your policy period ends. Make sure to ask your broker some questions, such as, “Will my policy renew automatically,” or, “Do I need to contact your office to renew my policy annually?”
A large amount of traffic violations or accidents is often a reason for car insurance cancellations.
Insurance providers are looking to insure drivers that do not have car accidents or traffic violations. Although a single citation or accident may not result in cancellation of your car insurance, multiple citations or accidents over a period of time may result in your policy being dropped.
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Shopping For Your New Policy
When your car insurance is canceled, one of the first things to do is to obtain a new insurance policy. In a number of states, it is illegal to operate a car without the state minimum requirements for auto insurance.
If you are caught driving during a lapse in your coverage, you could face:
- a suspension of your driver’s license
- a suspension of your vehicle’s registration
- reinstatement fees
- community service requirements
- an increase in your premium
- SR-22 high-risk car insurance
Additionally, gaps in coverage make it difficult to obtain a new car insurance policy as well.
If possible, it’s best to start shopping around for car insurance before your policy is canceled.
Depending on the reason for cancellation, you may have some notice before the actual cancellation is put into effect.
If this is the case, take a look at what other insurance companies are offering for car insurance rates. This is especially easy to do, now that many car insurance providers offer free online or over the phone insurance quotes.
Insurance providers are more willing to provide insurance to a driver that is currently insured compared to a driver that has a gap in coverage.
If your policy has already been canceled, then your options for shopping around may be limited. You still have the option to contact different insurance companies, whether online or over the phone, to request car insurance quotes.
However, many companies are hesitant to provide coverage to drivers that have had lapses in coverage, or that have had a policy canceled due to late or nonpayment, traffic violations or multiple accidents.
In these types of situations, there are state programs that provide the minimum liability limits required by the state to high-risk drivers, often at a higher rate than traditional insurance companies would charge.
Avoiding Future Cancellations
The final thing to do when your car insurance is canceled is to make sure you avoid future gaps in coverage, if at all possible.
Although the type of cancellation your provider initiates may make a small difference in obtaining new coverage, any cancellation can quickly become a headache. One lapse can be hard to overcome, but several lapses may make it impossible to acquire car insurance through any traditional provider.
There are a couple things that you can do to avoid future lapses:
- Keep all information current with your Department of Motor Vehicles (DMV), including keeping your registration and license details up-to-date.
- If you sell or otherwise relieve yourself of a vehicle, then make sure to let the DMV know, as well as surrendering any plates. This protects you from being tied to accidents that could occur in a previously owned vehicle.
- Make sure to respond to any letters or other contact types from your insurance company or DMV, and do so in a timely fashion.
Choosing Your Insurance Company
While car insurance cancellations are not the end of the world, they can be a difficult hurdle to overcome. Whether or not your policy has been canceled, it’s important to try and maintain good relationships with your insurance provider.
If you’re having trouble making on-time payments, speak to your insurance broker to see what options are available.
Due to every state having different requirements in relation to auto insurance, contacting your insurance broker or local DMV can be an option if you have concerns about your coverage, a potential lapse or if you need additional guidance.
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