Auto Insurance Dropped You? Here's What To Do Next

Being dropped by your auto insurance company is a scary prospect, but it's important to remember that you will usually be able to find another company to insure you. While it's rare for an insurance company to drop you after a claim, it can happen if you have a history of accidents, file excessive claims, or don't pay your premium on time. If you are dropped, you'll need to find a new insurance policy right away, as driving without insurance is illegal in most states and can result in fines and the loss of your driver's license.

Understand the reasons for cancellation and non-renewal

Auto insurance companies can cancel your policy at any time, but it's rare for them to do so after a single claim. You are more likely to be dropped after a claim or face non-renewal if you're a high-risk driver.

Cancellation

In most cases, insurance companies can cancel your policy within the first 60 days without providing a specific reason. After 60 days, most states require insurers to provide both you and your insurance agent with notice of the intention to drop your coverage. In most cases, providers must give at least a 30-day notice, but laws differ from state to state.

• Nonpayment of premiums
• A revoked or suspended driver's license
• Fraud or misrepresentation on your auto insurance application
• DUI conviction
• Serious or excessive traffic violations

Non-renewal

Insurers usually aren't required to renew your insurance policy, although some states limit unrestricted non-renewals to policies that have existed for a short period of time (less than two years, for example). Prior notice is always required, and state law might also require the insurer to provide a reason.

• Unpaid premium on a renewing policy
• A number of insurance claims in rapid succession
• A big hit on your driving record
• A lower credit score
• Your insurer no longer offers policies in your area

Correct mistakes, such as an unpaid bill

If you've missed a car insurance payment, don't panic. There are a few things you can do to rectify the situation and prevent your policy from being cancelled. Here's a step-by-step guide:

First Missed Payment

If this is your first missed payment, your insurance company may be lenient, especially if you're only a few days overdue. Pay your premium as soon as possible and contact your insurer to explain the situation. They may be able to waive any late fees or penalties. If you're not already using autopay, consider setting it up to avoid missing payments in the future.

Missed Payment Beyond a Few Days

If more time has passed, act quickly. Contact your insurance provider to discuss your options. Ask about their grace period policy and whether your coverage is still active. If your policy doesn't include a grace period or if you've missed it, your coverage could be at risk. Address the issue immediately to avoid a lapse in coverage.

Multiple Missed Payments

If you have multiple missed payments, your insurance carrier may be less lenient. Contact them as soon as possible to discuss your options. Consider setting up autopay to avoid future missed payments. If you're struggling to afford your premium, shop around for more affordable coverage or ask your current carrier about any available discounts.

Understanding Grace Periods

Most auto insurance companies offer a grace period to accommodate late payments. This period typically ranges from 10 to 30 days, giving you some leeway before cancellation. However, if you don't make the payment within the grace period, your policy may be cancelled retroactively to the original due date.

Reinstating Cancelled Policies

If your car insurance is cancelled, you'll need to purchase a new policy or reinstate your previous one. Contact your previous insurer to see if reinstatement is possible. If not, you may need to find coverage with another carrier. Remember, driving without insurance is illegal in most states, and you may face fines and license suspension if caught.

Financial Consequences

Missing car insurance payments can have financial repercussions. Your insurance rates may increase, and you may be required to pay fees at the DMV for lapsed coverage. Additionally, your car registration or driver's license may be suspended, and you may need to obtain SR-22 insurance. Your credit score may also be impacted if your overdue payments are sent to a collection agency.

Preventative Measures

To avoid missing car insurance payments in the future, consider the following:

• Enroll in autopay to ensure timely payments.
• Set reminders on your phone or calendar to alert you when your bill is due.
• Shop around for cheaper coverage if your current plan is unaffordable.
• Ask your insurance provider about any available grace periods or payment extensions.

Shop for a new policy and watch for discounts

If your auto insurance provider drops you, you'll need to shop for a new policy. This can be a daunting task, but there are a few things you can do to make the process easier. Firstly, it's important to understand why your previous policy was cancelled or not renewed. This will help you avoid making the same mistakes with your new policy. Common reasons for policy cancellation or non-renewal include unpaid insurance premiums, a revoked or suspended driver's license, fraud or misrepresentation on your auto insurance application, and DUI convictions.

Once you've determined the reason for the cancellation or non-renewal, you can start shopping around for a new policy. It's important to compare rates from multiple providers to find the best deal. You may also be able to get discounts on your new policy. For example, some insurers offer discounts for customers who have multiple policies with them, such as home and auto insurance. Additionally, having a positive driving history or driving infrequently can also result in lower rates.

When shopping for a new policy, it's crucial to secure coverage before your current policy ends. A lapse in coverage can negatively affect your rates in the future and make it more difficult to get insured. Therefore, it's essential to act promptly and allow yourself enough time to find a suitable policy. Correcting any behaviours or issues that contributed to the cancellation or non-renewal of your previous policy may also help improve your chances of getting a better rate on your new policy.

Secure new coverage before your current policy ends

If your auto insurance provider drops you, it is important to secure a new policy before your current one ends. Driving without insurance is illegal in nearly every state, and a lapse in coverage will cause your rates to increase in the future.

When shopping for a new policy, look for discounts you might qualify for, such as having multiple policies with the same insurer, having a positive driving history, or driving infrequently or for short distances. You may also need to pay a higher rate than you were previously.

If you are unable to find a new policy before your current one ends, you may have to apply for insurance through your state's guaranteed auto insurance program.

Correct behaviours that contributed to the situation

If you've been dropped by your auto insurance company, there are several steps you can take to correct behaviours or issues that contributed to the situation. Here are some detailed and instructive suggestions:

• Address any issues with your driving record: If your insurer dropped you due to a DUI conviction, loss of driving privileges, or excessive traffic violations, take steps to improve your driving behaviour and address any underlying issues. This may involve completing a driving safety course, seeking professional help for substance abuse issues, or taking a defensive driving course to improve your driving skills.
• Improve your credit score: A low credit score can indicate to insurers that you are more likely to file insurance claims. Take steps to improve your credit score, such as paying your bills on time, reducing your debt, and maintaining a long credit history.
• Reduce the number of insurance claims you file: If you have a history of filing excessive claims, work on improving your driving habits to reduce the likelihood of accidents and incidents. Additionally, consider paying for minor repairs out of pocket instead of filing a claim, as this can help lower your risk profile.
• Be honest and accurate on your insurance application: Misrepresentation or fraud on your application can lead to policy cancellation. Ensure that all information provided is accurate and honest, including your driving history, garaging address, and any other relevant details.
• Maintain continuous insurance coverage: A lapse in coverage can negatively impact your rates and risk profile. Make sure to secure new coverage as soon as possible to avoid any gaps in your insurance history.
• Address any health issues that affect your driving ability: If your driving privileges were revoked due to a health issue, work with your medical team to address and manage the condition. This may involve seeking treatment, making lifestyle changes, or adapting your vehicle to accommodate your needs.
• Improve your overall risk profile: Insurers assess a range of factors when determining your risk level, including your driving record, credit score, and claims history. Work on improving these areas to lower your risk profile and increase your chances of securing more favourable coverage.

Frequently asked questions