Auto Insurance Cancelled: What To Do Next?

If your auto insurance has been cancelled, it's important to act quickly to avoid a lapse in coverage, which can lead to higher insurance premiums in the future or even difficulty in getting car insurance at all. Your first step should be to contact your insurance company to see if they will reinstate your policy. If not, you may need to look for a new insurance provider or buy car insurance from your state's assigned-risk pool.

Contact your insurer to see if they will reinstate your policy

If your auto insurance has been cancelled, it's important to contact your insurer right away to see if they will reinstate your policy. This is because driving without insurance is illegal in most states and can result in serious consequences, such as losing your license, having your car repossessed, or facing legal liability in the event of an accident.

Contact Your Insurer Promptly

Take immediate action by reaching out to your insurance provider to understand why your policy was cancelled and discuss the possibility of reinstatement. It's important to do this as soon as you receive the cancellation notice, as there may be a grace period during which reinstatement is more likely. Be prepared to provide relevant information, such as your name, date of birth, Social Security number, driver's license number, and details about the insured vehicle.

Address Outstanding Payments

If your policy was cancelled due to missed payments, pay any outstanding premiums, fines, interest, or fees. Many insurance companies offer a grace period after a missed payment, during which you can reinstate your coverage by bringing your payments up to date. However, late payments may result in the loss of certain discounts, leading to higher rates after reinstatement.

Resolve Documentation Issues

In some cases, your policy may have been cancelled due to issues with your driver's license or discrepancies in your application. If this is the case, your insurer may require documentation confirming that you've resolved these issues. For example, if your license was suspended, you may need to provide proof that you've completed a traffic class and regained your driving privileges. If there were inaccuracies in your application, you may need to submit a new application with correct information.

Understand Reinstatement Requirements and Waiting Periods

Each insurance company has its own policies and requirements for reinstating a cancelled policy. There may be specific conditions or waiting periods you need to fulfil before your policy can be reinstated. For example, some companies may require you to sign a no-loss statement, confirming that you haven't had any accidents or losses during the period when your policy was cancelled.

Explore Other Options

If your current insurer is unable or unwilling to reinstate your policy, you may need to look for alternative options. You can try shopping for a new insurance provider or consider joining your state's assigned-risk pool, which ensures that high-risk drivers can obtain the minimum required insurance. However, be prepared for higher insurance rates, as a lapse in coverage is generally associated with increased premiums.

Ask your state for help

If you are unable to find a new insurance provider, you can turn to your state's assigned-risk pool as a last resort. States create assigned-risk pools to ensure that even risky drivers have the minimum insurance required to drive legally. Insurance companies agree to provide car insurance to drivers in the assigned-risk pool, regardless of how risky they are.

Contact your state insurance department to find out more about the assigned-risk pool. Expect to pay much more for assigned-risk pool insurance than you would for standard car insurance.

If you are a low-income driver, you may be able to get financial help with car insurance payments in California, New Jersey, and Hawaii. These state-sponsored insurance options offer affordable car insurance for low-income families who need to meet state minimum insurance requirements.

California's Low-Cost Auto (CLCA) program offers liability auto insurance for residents with a clean driving record, a valid license, and a car valued at less than $25,000. To qualify, you must also meet certain income requirements and have had continuous liability insurance coverage for the past six months.

New Jersey's Special Automobile Insurance Policy (SAIP) program offers affordable government car insurance for residents enrolled in Medicaid with hospitalization coverage and with a valid state driver's license or permit. The SAIP program pays for medical expenses and accidents involving uninsured motorists, but it does not cover damage to your vehicle or injuries to passengers in your car. This policy costs $48 per month.

Hawaii's Aged, Blind, and Disabled (AABD) program offers government assistance car insurance to residents who are enrolled in Medicaid, have a valid Hawaii driver's license, are 65 years of age or older, blind, or disabled, and have income below 34% of the federal poverty level. In some cases, this program may provide free auto insurance for low-income drivers.

Find a new insurance provider

If your auto insurance has been cancelled, you will need to find a new insurance provider as soon as possible. Here are some steps to help you find a new auto insurance provider:

• Determine your coverage needs: Before you start looking for a new insurance provider, it's important to understand the type and amount of coverage you need. Most states have minimum coverage requirements, so make sure you are familiar with the laws in your state. Consider factors such as the age and features of your car, as well as your driving record and annual mileage, which can impact the cost of insurance.
• Research and compare different insurers: Take the time to research and compare multiple insurance companies. Look into their customer service, claims handling, and overall reputation. Compare rates and coverage options from several insurers to find the best fit for your needs. You can use online tools and comparison sites to get quotes from multiple insurers at once.
• Consider discounts: Many insurance companies offer a variety of discounts that can lower your premium. Look for insurers that offer discounts based on your specific circumstances, such as bundling policies, having a clean driving record, being a good student, or having safety features in your car.
• Get quotes: Contact several insurance companies and get quotes based on your specific information, such as your age, gender, driving history, and vehicle details. This will give you a more accurate idea of the cost and coverage options available to you.
• Read reviews: Check reviews and ratings from other consumers to get an idea of their experiences with the insurance company. Look for companies with high ratings in customer service, claims handling, and overall satisfaction.
• Consider local agents: If you prefer more personalized service, consider working with a local insurance agent. They can provide expert guidance and help you navigate the different coverage options to find the best policy for your needs.

Join your state's assigned-risk pool

If your car insurance has been cancelled, one option is to join your state's assigned-risk pool. This is a programme that provides auto insurance to high-risk drivers who have been denied coverage by private insurance companies. Auto insurers voluntarily participate in these state-sponsored plans, and each insurer must accept the motorists assigned to them by the state.

State-assigned risk pools are typically a last resort option, as the premiums are significantly higher than standard insurance policies. The coverage options may also be limited, and you may not be able to purchase collision and comprehensive insurance. However, it is a way to ensure you meet your state's minimum insurance requirements and can legally drive your car.

To find out more about your state's assigned-risk pool, contact your insurance professional or the state insurance department. They will be able to provide you with information on the specific requirements and limitations of the programme. You may also need to apply to several car insurance companies and be denied coverage before you are eligible to join the assigned-risk pool.

While being part of the assigned-risk pool can be costly, you can take steps to improve your driving record and financial situation to eventually qualify for a standard insurance policy. This includes taking a defensive driving course, driving safely and obeying traffic laws, avoiding drinking and driving, repairing your credit, and taking precautions against theft and carjacking.

Avoid driving without insurance

Driving without insurance is illegal in most states and can have serious consequences. If you are caught driving without insurance, you may face penalties such as hefty fines, suspension of your driver's license, suspension of your vehicle registration, jail time, and mandatory SR-22 filing with the state DMV. These penalties can be even more severe for repeat offenders.

To avoid driving without insurance, it is important to take the following steps:

• Find an affordable car insurance provider: Shop around and compare quotes from different insurers to find a policy that fits your budget. This will help you avoid a lapse in coverage, which can lead to higher premiums in the future.
• Keep your proof of insurance with you: Always carry your proof of insurance in your vehicle or on your mobile device. Some states may suspend your license if you are pulled over without proof of insurance, even if you have an active policy.
• Don't miss insurance payments: Late insurance payments can lead to your policy being cancelled. Set up automatic payments or reminders to ensure you don't miss any due dates.
• Avoid lapses when changing insurers: Do not cancel your old insurance policy until your new policy is in effect to ensure continuous coverage.
• Don't stop making payments without informing your insurer: If you need to cancel your policy, be sure to notify your insurance company. Otherwise, you may be responsible for late fees.
• Maintain insurance even if your car is not in use: If your car is off the road, check with your state's DMV for rules regarding insurance coverage. Consider storage insurance to protect your vehicle while it is not being driven.

By following these steps, you can help ensure that you are always insured when driving, avoiding the legal and financial consequences of driving without insurance.

Frequently asked questions