Bad Driving Habits That Can Get You Dropped By Your Auto Insurer

There are a number of reasons why your auto insurance provider might drop you, from non-payment of premiums to a DUI conviction. While it's rare for a company to cancel your policy after a single claim, they might do so if you have a history of accidents or excessive claims. Insurance fraud, loss of driving privileges, and multiple traffic violations are also likely to get your policy cancelled.

DUI/DWI convictions

A DUI or DWI conviction can have serious consequences for your auto insurance. Firstly, it is important to understand the distinction between a DUI and a DWI. DUI stands for "driving under the influence", and DWI stands for "driving while intoxicated". While these terms are often used interchangeably, some states make a distinction between the two based on the degree of intoxication. For example, in Rhode Island, a DUI is assigned to drivers with blood alcohol concentrations (BACs) of .08 percent and above, while a DWI is assigned to drivers under 21 with BACs between .02 and .08 percent.

Now, let's discuss the impact of DUI/DWI convictions on your auto insurance. One of the main consequences is an increase in your insurance rates. Insurance companies consider drivers with DUI/DWI convictions as riskier to insure, and as a result, your premium is likely to increase significantly. The exact increase will depend on your insurance company, but it can range from 13% to over 100% for a single conviction.

In addition to higher rates, you may also face challenges in obtaining or maintaining your auto insurance policy. Some insurance companies may refuse to insure drivers with DUI/DWI convictions, deeming them as high-risk. If you already have a policy and are convicted of a DUI/DWI, your insurance company may choose to drop you or not renew your policy. In some cases, they may increase your premiums instead of dropping you.

Furthermore, a DUI/DWI conviction may result in the suspension of your driver's license. To get your license reinstated, you may be required to obtain an SR-22 certificate, which serves as proof of financial responsibility. This certificate is filed with your state's DMV and demonstrates that you are maintaining the minimum required car insurance coverage. While an SR-22 does not directly impact your premium, there is typically a small fee associated with the filing.

The consequences of a DUI/DWI conviction can be far-reaching and long-lasting. In most states, a DUI/DWI will remain on your driving record for three to five years, but in some states like California, it can stay on your record for up to 10 years or even permanently. During this time, you may struggle to find affordable auto insurance and may need to shop around for insurers who are willing to cover high-risk drivers.

To summarize, a DUI/DWI conviction can result in higher insurance rates, difficulty obtaining or maintaining insurance coverage, and the need for an SR-22 certificate. It is important to understand the serious nature of these convictions and the impact they can have on your auto insurance.

Loss of driving privileges

Reasons for Loss of Driving Privileges

• Driving Under the Influence (DUI): DUI laws vary by state, but a DUI conviction will typically lead to a driver's license suspension. The length of the suspension often depends on factors such as blood alcohol content (BAC), age, the presence of an accident, and whether it is a repeat offense.
• Specific Traffic Ticket Violations: Certain traffic violations carry more severe penalties, including the potential loss of driving privileges. These violations can include leaving the scene of an accident, reckless endangerment in a construction zone, eluding a police officer, driving without insurance, vehicular assault or manslaughter, and leaving a child unattended in a running vehicle.
• Too Many Traffic Tickets: In some states, a driver may be flagged as a habitual offender if they accumulate an excessive number of traffic tickets, such as speeding tickets. This can result in the loss of driving privileges, particularly in states without DMV point systems.
• Non-Driving Violations: Surprisingly, violations that occur outside of driving can also impact your driving privileges. For example, failing to pay child support or being convicted of stealing motor fuel may result in a driver's license suspension. This is also applicable to teen drivers, where certain states may suspend driving privileges for non-driving-related offences such as making a false bomb threat or dropping out of school.

Impact on Auto Insurance

When an individual loses their driving privileges, it can have a direct impact on their auto insurance. Insurance companies may cancel the policies of those who no longer have a valid driver's license or are deemed unfit to drive. This is because the inability to drive legally increases the risk for insurance providers. As a result, individuals in this situation may struggle to find new insurance providers or face higher rates when they do.

Preventative Measures

To avoid losing your driving privileges, it is essential to abide by driving laws and practice safe driving habits. Additionally, maintaining continuous auto insurance coverage and carrying proof of insurance when driving can help prevent issues. Understanding the specific laws and penalties in your state can also help you make informed decisions to protect your driving privileges.

Insurance fraud

• Providing a false address: Insurance rates are influenced by where your car is usually parked overnight. Lying about your address on insurance documents is illegal, even if you are related to or know the people living 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.
• Filing multiple claims for a single accident: A single claim should cover all medical expenses and vehicle repairs. It is considered fraud to pass off multiple damage or injury claims as being caused by different accidents.
• Counterfeit airbags: In rare cases, deployed airbags are replaced with counterfeits during the repair process. Counterfeit airbags have a high likelihood of malfunction and may explode, endangering drivers and passengers with metal shrapnel.
• Staged accidents: These are incidents where a driver intentionally causes a collision with another vehicle to receive a fraudulent insurance payout. Common types include the "swoop and squat," where two vehicles trap a victim and force them into a rear-end collision, and the "wave down," where two vehicles wave a victim to pull out of a parking lot or side street, then stage a crash.
• Premium diversion: In this scam, a dishonest insurance agent steals your premiums by pocketing your money and failing to set up your coverage. When an accident occurs, you discover that you have no insurance and must cover the loss yourself.
• Windshield replacement rip-offs: In states that do not allow insurance companies to charge a deductible for windshield replacement, unscrupulous glass replacement contractors may trick customers into unnecessary replacements, even if there is only minimal damage.

Non-payment of premiums

Insurance companies generally set specific dates and times for receiving payments, and if you miss them, they could cancel your policy. Some insurers may have a grace period of 10 to 30 days, but this is not guaranteed, and your policy could be cancelled if you miss the grace period. It is important to note that insurance companies can also cancel your policy without providing a specific reason within the first 60 days of the policy.

If you miss a payment, it is advisable to act quickly. Contact your insurance provider to discuss your options, and consider setting up autopay to avoid future issues. If you are unable to make a payment due to financial constraints, reach out to your insurer as soon as possible to explore alternative payment deadlines or deferment options.

The consequences of a lapse in insurance coverage due to non-payment can be significant. Your insurer may not only cancel your policy but may also refuse to offer you another policy. Additionally, you may face increased rates when purchasing a new policy, fines from the Department of Motor Vehicles (DMV), suspension of your driver's license and registration, and penalties from your lienholder if your vehicle is financed.

Too many claims

While it's rare for an insurance company to drop you after a claim, they may view you as a high-risk customer if you have a pattern of filing excessive claims. This could lead to your auto insurance policy being cancelled or not renewed.

Insurance companies tend to pay more attention to accidents where you are at fault. However, being involved in too many collisions, even those where you weren't at fault, can be a red flag for insurers. If you file claims frequently, your insurer may consider you a greater risk and decide to non-renew your policy.

The first step is often to increase your car insurance rate. If you then have another accident or file more claims, the insurer may send a notice that they won't be renewing your policy at the end of its term.

There is no limit on the number of insurance claims you can file, but most experts say that filing more than one claim per year could result in an insurance company cancelling your policy. Most insurance companies will drop you as a client after three claims over a three-year period, regardless of the type of claim.

If you are dropped by your insurer for making too many claims, you may find it difficult to get a new policy and you will likely have to pay higher rates when you do.

Frequently asked questions