Dropped By Your Auto Insurer: Understanding The Reasons And Your Rights

Auto insurance companies can drop you for a variety of reasons, and it's important to be aware of these to ensure you don't lose coverage. The most common reason for cancellation is non-payment or late payment of premiums. Other reasons include DUI or DWI convictions, loss of driving privileges, insurance fraud, and filing excessive claims. You might also be dropped if you fail to disclose necessary information, make a fraudulent claim, or have a medical condition affecting your ability to drive safely. Additionally, using your car for business purposes or driving passengers for hire without the appropriate insurance can lead to cancellation. It's worth noting that insurance companies rarely cancel coverage after a single accident, but they may do so if you have a pattern of causing accidents or not paying your premiums.

DUI or DWI convictions

A DUI or DWI conviction can have serious consequences for your auto insurance. Many insurance providers will drop a driver that's been convicted of a DUI or DWI offence. Providers tend to view those with such convictions as high-risk, which can lead to the driver's policy being cancelled. If the insurer decides not to drop a high-risk driver, having a DUI or DWI on your record can result in much higher insurance premiums.

If you are convicted of a DUI or DWI, you may need to file a Statement of Responsibility or SR-22, which confirms that you carry the minimum coverage required by your state. Not all insurance companies offer the option of filing an SR-22, and those that do will typically charge high premiums for basic coverage.

If you are dropped by your insurance company following a DUI or DWI conviction, it can be challenging to find a new insurer. Some companies specialise in high-risk drivers, and some insurers participate in state-assigned risk pools, meaning they must accept the drivers assigned to them by the state. In either case, you can expect to pay high premiums.

To get cheaper DUI or DWI insurance rates, you can compare car insurance rates from multiple carriers, increase your deductible to lower your premiums, and ask about discounts you may still qualify for, such as bundling your home and auto policy.

Non-payment of premiums

If you are having trouble affording your premium payments, it is important to be proactive and take steps to address the issue. Contact your insurance company to clarify your grace period and shop around for a more affordable policy. Explore your financial options and consider tweaking your budget to ensure you can continue to afford your premium payments. Reducing your expenses, selling unused items, or increasing your income may be necessary to avoid a lapse in coverage.

It is worth noting that the consequences of not paying your insurance premium can be significant. Your outstanding balance could be sent to collections, which will likely be reported on your credit report and negatively impact your credit score. Additionally, driving without insurance can mean violating state laws, resulting in fines and suspension of your vehicle registration and driver's license. Therefore, it is crucial to stay on top of your insurance payments and seek alternative solutions if you are struggling to make ends meet.

Fraudulent claims

Insurance companies have a zero-tolerance policy when it comes to fraud. They will likely cancel the policy of anyone caught filing a fraudulent claim or lying on their insurance application. This is because fraud increases the risk for the insurer, and they may view the policyholder as untrustworthy.

In addition to policy cancellation, fraudulent claims can lead to legal consequences. Insurance fraud is a criminal offence and can result in fines, legal penalties, or even jail time. Thus, it is essential for policyholders to be honest and accurate in their dealings with insurance companies to avoid these severe repercussions.

To avoid policy cancellation due to fraudulent claims, it is crucial to be honest and transparent with your insurance company. Provide accurate information on your insurance application and only file legitimate claims. Remember that insurance companies have robust systems in place to detect and investigate potential fraud, so the likelihood of getting away with fraudulent claims is slim.

Revoked or suspended driving license

A revoked or suspended driving license can lead to your auto insurance being dropped. While insurance companies cannot automatically cancel your policy mid-term, they will eventually drop you as a customer. This is because, over time, a suspended license is seen as a high-risk factor.

If your license is suspended, you can still be insured, but it is difficult. Most companies require a valid license to provide insurance. If you are a new customer, the insurance company will run a check and quickly discover your license is suspended, and your policy will not be issued. If you are an existing customer, the company has a certain amount of time (30-90 days) to conduct a background check and cancel your policy.

If you are in the middle of a policy term and your license is suspended, you will likely remain covered until the end of the term, unless your policy contains an exclusionary clause for driver suspensions. However, you cannot drive legally, and if you are caught driving with a suspended license, you will face serious consequences, including fines, jail time, and your car being impounded. You will also have to pay much higher premiums for your next policy.

If you want to keep your car insured while your license is suspended, you can designate someone else as the insured driver, or apply for a hardship or restricted license. A restricted license allows you to drive only for specific tasks, like getting to work. You will be seen as a high-risk driver and will have to pay higher rates.

To get your license reinstated, you will need to complete certain steps, which often include providing proof of insurance. You may also need to file an SR-22, a certificate of financial responsibility, with your state to prove you have the required minimum amount of liability insurance. This is usually necessary for drivers convicted of serious traffic offenses, such as a DUI.

Unsafe vehicle

An unsafe vehicle is a vehicle that is not roadworthy and is deemed to be a high risk for accidents. This can be due to a number of factors such as poor maintenance, faulty parts, or failure to meet safety standards. Here are some ways in which an unsafe vehicle can lead to auto insurance companies dropping you as a client:

Non-Renewal of Policy

Auto insurance companies may choose not to renew a policy at the end of its term if the client's vehicle is deemed unsafe. This could be due to a history of accidents or claims that indicate the vehicle is not being properly maintained or is inherently unsafe. The insurance company may view the client as a high-risk driver and decide to end the policy to protect themselves from potential financial liability.

Cancellation of Policy

In some cases, auto insurance companies may cancel a policy before the end of its term if they deem the vehicle to be unsafe. This could be due to a serious issue, such as a vehicle that has failed safety inspections or has been modified in a way that makes it unsafe for the road. The insurance company may consider the vehicle to be a liability and choose to terminate the policy immediately rather than waiting for the end of the term.

Increased Premiums

If an insurance company deems a vehicle to be unsafe, they may choose to increase the client's insurance premiums. This is often the first step before considering non-renewal or cancellation. The insurance company may view the unsafe vehicle as a higher risk and therefore charge a higher rate to cover potential costs associated with accidents or claims.

Loss of Driving Privileges

If a vehicle is deemed unsafe and the client loses their driving privileges as a result, the insurance company may cancel the policy. This could be due to a vehicle that has been deemed unfit for the road by authorities or a medical condition that affects the client's ability to drive safely. The insurance company may no longer see the client as a viable candidate for coverage and choose to drop them.

Fraud

If a client is found to be operating an unsafe vehicle and has misrepresented the condition of the vehicle to the insurance company, this could be grounds for policy cancellation. Insurance companies have a zero-tolerance policy when it comes to fraud, and providing incorrect information about the safety or roadworthiness of a vehicle is a serious offence that can lead to termination of the policy.

Frequently asked questions