Auto Insurance: Dropped Or Renewed?

Yes, your auto insurance company can drop you, but it's not very common. Auto insurance companies rarely cancel coverage after one accident or claim. However, they may drop you if you have a pattern of causing accidents, filing excessive claims, or not paying your premium on time. Additionally, a DUI conviction, loss of driving privileges, or insurance fraud may also lead to your policy being cancelled. To avoid being dropped, maintain a clean driving record, drive safely, and make timely payments.

DUI/DWI convictions

A DUI or DWI conviction can have serious consequences for your auto insurance. After a DUI or DWI conviction, you could face fines, license and registration suspensions, and even jail time. The specific penalties depend on factors such as the state in which the conviction occurred, whether this was a first offence, and how much over the legal limit the driver was, among others.

Insurance companies consider drivers with a DUI or DWI conviction to be high-risk. As a result, your insurance company will likely raise your premium to compensate for their increased likelihood of paying out a future claim on your behalf. Your insurance company may also deem you a high-risk driver and refuse to renew your policy, forcing you to seek insurance elsewhere.

In some states, you may be required to obtain SR-22 insurance after a DUI or DWI conviction. An SR-22 certifies that you have proper car insurance and is required for high-risk drivers. This will result in additional fees and higher insurance rates.

A DUI or DWI conviction will typically remain on your driving record for three to five years, although in some states, such as California, the conviction may stay on your record for ten years or permanently. During this time, you can expect to pay higher insurance rates. Even after the conviction is no longer on your record, you may not be eligible for certain discounts, such as a good driver discount.

If you are convicted of a DUI or DWI, it is important to shop around for insurance as rates can vary significantly between companies. Some companies, such as Progressive, specialise in insuring high-risk drivers and may offer more competitive rates.

Loss of driving privileges

• Causes of Loss of Driving Privileges: Loss of driving privileges refers to situations where an individual is no longer legally permitted to drive. This can happen due to a variety of reasons, including driving-related infractions or medical issues. Common causes include Driving Under the Influence (DUI) or Driving While Intoxicated (DWI) convictions, which are treated as high-risk behaviours by insurance companies and can lead to policy cancellation. Other driving-related infractions, such as reckless endangerment, eluding a police officer, vehicular assault, or leaving the scene of an accident, can also result in the loss of driving privileges.
• Impact on Auto Insurance: When an individual loses their driving privileges, their auto insurance policy may be cancelled by the insurer. This is because the ability to drive legally is a fundamental requirement for holding a valid auto insurance policy. The insurance company may choose to end the policy immediately or wait until the end of the policy term, depending on the specifics of the situation and the state regulations.
• Medical Conditions: Loss of driving privileges can also occur due to medical conditions that affect an individual's ability to drive safely. This could include physical or mental health issues that impair an individual's judgement, reflexes, or coordination. In such cases, a medical professional's assessment may be required to determine fitness to drive, and the insurance company may cancel the policy if the individual is deemed unfit.
• Consequences and Alternatives: Losing auto insurance due to the loss of driving privileges can have significant consequences, including difficulty in obtaining a new policy and potentially higher rates when insurance is reinstated. However, it is important to note that many insurers do accept customers who have experienced policy cancellation due to loss of driving privileges. These individuals may need to pay higher rates and may have to explore alternative insurance options or providers.
• State-Specific Variations: It is important to understand that laws and regulations regarding the loss of driving privileges and auto insurance cancellation vary from state to state. Some states have stricter DUI rules, such as zero-tolerance policies for drivers under 21, while others employ point systems that accumulate traffic violations, leading to license suspension or revocation. Understanding the specific rules and consequences in your state is crucial.
• Prevention and Safe Driving: To avoid the loss of driving privileges, it is essential to adhere to driving laws and practice safe driving habits. This includes avoiding behaviours such as driving under the influence, reckless driving, or committing traffic violations. Maintaining a clean driving record and adhering to legal requirements can significantly reduce the chances of losing driving privileges and auto insurance coverage.

Insurance fraud

Soft Fraud

• Exaggerating a claim: For example, claiming that a dent in your bumper was caused by a recent hit-and-run accident, when in reality, you backed into your mailbox.
• Omitting critical details: Leaving out important information on your auto insurance application, such as previous driving offences or accidents, can also be considered soft fraud.

Hard Fraud

• Faking an accident: This involves deliberately causing an accident to receive an insurance payout.
• Filing multiple claims for one accident: For instance, trying to pass off multiple damage or injury claims as being caused by different accidents when they actually occurred during one incident.
• Providing a false address: Your car insurance rate is based on where your car is usually parked overnight. Lying about your address is illegal, even if you are related to or know the people who live at the false address.
• Abandoning or destroying a car and reporting it as stolen: When a car is stolen and not recovered, the insurance company considers it a total loss and pays out the vehicle's actual cash value. Reporting a car as stolen after you've disposed of it, hidden it, or sold it is a serious crime.

Excessive claims

Insurers typically look at claims over a multi-year period. So, whether you've filed two insurance claims in six months or two claims in two years, you'll be seen as having multiple car insurance claims. If you have multiple claims, your rate may increase, even if you weren't at fault in the accident (depending on your state and your insurer).

While an insurer can't cancel your policy mid-term if you've made multiple claims, they may choose not to renew your policy. This means you'll be able to see the policy through to the end of the term, but you won't be able to renew your policy once the term expires. In this case, you'll need to purchase a new policy from a different auto insurance company as soon as possible to avoid a lapse in coverage.

To avoid being dropped by your insurance company, practice safe driving habits and be sure to pay your premiums on time and in full.

Nonpayment of premiums

Most insurance companies offer a grace period, typically ranging from 10 to 30 days, during which you can make your payment without penalty. If you exceed this grace period, your insurance company may cancel your policy, and this cancellation could be retroactive to the date your payment was originally due. In addition, you may be charged late fees, and your good payment history discounts may be revoked.

If your policy is cancelled due to nonpayment of premiums, you may be able to have it reinstated by contacting your insurance company and paying any outstanding premiums and fees. However, the carrier's decision to reinstate your policy may depend on factors such as your reason for missing payments, your history with the company, and the number of past policy lapses.

To avoid cancellation due to nonpayment, consider enrolling in autopay or setting reminders to ensure that you make your payments on time. If you are unable to afford your premiums, you can also contact your insurance agent to review your policy and discuss options for reducing your payments, such as increasing your deductible or changing your coverage.

Frequently asked questions