Driving Risks: Auto Insurance Drop

There are several reasons why you could be dropped from your auto insurance, and many of them are related to your driving record. For example, if you have multiple accidents within a three-year window, your insurance company may drop you. Similarly, if you have a DUI or DWI conviction, your insurance company is likely to cancel your policy. Other reasons for being dropped include non-payment of premiums, insurance fraud, and filing excessive claims. It's worth noting that it's rare for an insurance company to drop you after a single claim, and they usually have to provide notice before cancelling your policy.

DUI or DWI convictions

DUI (driving under the influence) and DWI (driving while impaired or intoxicated) are terms used to describe the illegal act of operating a vehicle while impaired by substances. The precise definitions of these terms depend on the state in which the incident occurred. In some states, the terms are used interchangeably, while in others, they are treated as separate offences with different penalties.

Being convicted of a DUI or DWI offence will almost certainly result in your insurance company deeming you a high-risk driver and raising your premium to compensate for their increased likelihood of paying out a future claim on your behalf. The increase in your premium will vary depending on the insurer. For example, Farmers shows one of the biggest premium increases for drivers with a DUI conviction, with an annual premium of nearly $6,000 – an increase of more than 80% from their standard rate. On the other hand, Progressive has lower rates on average for drivers after a DUI, with an average annual premium of $2,296 for a driver with a DUI conviction.

In addition to higher premiums, your state might also require that you obtain SR-22 insurance after a DUI or DWI conviction. An SR-22 certifies that you have proper car insurance and is typically required for high-risk drivers. You’ll pay a fee of about $25 to the insurance company for the certificate, and you’ll need to retain it for at least three years.

Your insurance company may also refuse to renew your policy after a DUI or DWI conviction, forcing you to seek insurance elsewhere. Insurance for high-risk drivers is typically much more expensive than for standard or preferred-risk drivers.

Finally, your license may be suspended after a DUI or DWI conviction, and your state may require you to carry a certificate of financial responsibility, or SR-22, to get it reinstated.

Loss of driving privileges

There are three types of licence punishments: suspensions, revocations and cancellations. A suspension is a temporary withdrawal of your driving privileges. After a set period, your licence is restored, and you can drive again. A revocation is more serious and indefinite; you must reapply for your licence and may have to retake your driving test. There is no guarantee that your licence will be reinstated. A cancellation means that the reasons for your privilege no longer exist, or the DMV disqualifies you. This can be due to incorrect information on your application or health reasons.

Some of the most common reasons for losing driving privileges include:

• Driving under the influence (DUI) of drugs or alcohol.
• Leaving the scene of an accident, especially one involving injury or death.
• Willfully fleeing a police officer.
• Vehicular assault, homicide or manslaughter.
• Driving without insurance.
• Committing a felony involving a motor vehicle.
• Too many traffic tickets or points on your licence.

The consequences of losing your driving privileges can be severe and impact your life in many ways. It is important to be aware of the laws and drive safely and responsibly to avoid losing this privilege.

Insurance fraud

Insurers generally have a zero-tolerance policy when it comes to insurance fraud and will likely cancel the policy of anyone caught committing fraud. This is because fraud increases the risk for the insurance company, and they may view you as a high-risk customer. While insurance fraud can result in a policy cancellation, it is important to note that insurers must provide notice before cancelling a policy. The amount of notice required varies by state but is often at least 30 days.

In addition to insurance fraud, there are several other reasons why an insurance company may drop you, including DUI or DWI convictions, loss of driving privileges, late or missed payments, and filing excessive claims. To avoid being dropped by your insurance company, it is important to drive safely, pay your premiums on time, and be honest on your insurance application.

Filing excessive claims

Filing excessive auto insurance claims can have serious repercussions. While it's rare for an insurance company to drop you after a single claim, filing multiple claims—especially those that are your fault—can lead to your policy being cancelled or not renewed.

Insurance companies consider excessive claims as a sign of high-risk behaviour. Once you're deemed too high a risk to cover, your provider may decide to drop you as a customer. This is more likely to happen if you're already considered a high-risk driver.

If you file too many claims, you may receive a cancellation notice from your provider. This means your policy will be cancelled before the end of its term. Alternatively, your provider may opt for non-renewal, which means your policy will continue until the end of its term but won't be renewed once it expires.

If you're dropped by your insurance company, you'll need to purchase a new policy from a different provider as soon as possible to avoid a lapse in coverage. This may be more difficult and could result in higher rates.

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

Nonpayment or late payment of insurance premiums

Most insurance companies offer a grace period for late payments, which is typically 30 days. During this time, you may be charged late payment fees, but your coverage will remain active. However, if you fail to make the payment within the grace period, your policy may be cancelled.

In some cases, insurance companies may distinguish between "late payment fees" and "reinstatement fees". A late payment fee is associated with a payment made after the due date but before the policy cancellation date. On the other hand, a reinstatement fee is charged when you want to reinstate your policy after it has been cancelled due to non-payment.

It's important to note that insurance companies are required to provide clear information about these fees and their consequences before charging them. This information should be included in the insurance policy form or billing statement.

If you have missed a payment, it's best to contact your insurance provider as soon as possible to understand their specific policies and procedures regarding late payments and non-payment. They may be able to work with you to find a solution, such as offering a payment plan or extension.

Additionally, it's worth noting that non-payment or late payment of insurance premiums can also impact your future insurance options. When shopping for a new policy, be prepared to pay higher rates, as insurers may consider you a riskier client due to your payment history.

To avoid having your auto insurance dropped, it's crucial to stay on top of your payments and ensure they are made on time and in full. This is one of the most important factors in maintaining continuous coverage and avoiding the hassle and potential risks of having your policy cancelled.

Frequently asked questions