Auto Insurance Cancelled: Steps To Take Now

If your auto insurance is cancelled, you should take immediate action to avoid driving without insurance, which is illegal in nearly every state. Your first step should be to contact your insurance company to find out why your insurance was cancelled and see if they will reinstate your policy. If they won't, you'll need to look for a new insurance provider or buy 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, you should contact your insurer immediately to see if they will reinstate it. If your car insurance was cancelled because you missed a payment, you may be able to reinstate it. Many insurance companies offer a grace period after you've failed to make a payment. During the grace period, your car insurance can be reinstated once you pay the missed premiums and any fines, interest or fees. Whether reinstatement is possible depends on the terms of your policy and state laws, so check with your insurance company for details.

Reinstating your policy during the grace period prevents you from having a gap in coverage. Being without auto insurance (known as having a lapse in coverage) can mean higher car insurance premiums in the future. A lapse in coverage could even make it difficult to get car insurance at all.

If your insurer agrees to reinstate your car insurance policy after it’s been cancelled, you will need to pay any outstanding premiums and other fees. You may also need to sign a no-loss statement. This is a document that attests that you did not experience any loss that would result in a claim during the period your policy was not in effect.

Look for a new insurance provider

If your auto insurance provider cancels your policy, you will need to look for a new one. This is because driving without insurance is illegal in nearly every state.

Begin by gathering quotes from several insurance carriers. You can do this by comparing rates from multiple companies online or by contacting your state's department of insurance or an independent insurance agent for referrals.

When shopping for a new policy, you may have to consider a non-standard insurer that provides coverage for high-risk drivers. You may be considered a high-risk driver if you have a history of unsafe driving, such as DUIs or accidents, or if you have a lapse in coverage. A lapse in coverage could also result in higher insurance rates.

If you are still unable to find a policy, you can join your state's assigned-risk pool as a last resort. States create these pools to ensure that even high-risk drivers have the minimum insurance required to drive.

Join your state's assigned-risk pool

If you are unable to get auto insurance through the voluntary market, you can apply to your state's assigned-risk pool. This is a last-resort option for drivers who are unable to obtain insurance elsewhere.

Each state has an assigned-risk pool to ensure that even high-risk drivers can obtain the minimum insurance required by the state to drive legally. Insurance companies are required to participate in the state pool and must accept drivers who are assigned to them.

To join your state's assigned-risk pool, contact your state insurance department or any auto insurance agent in your state, who should be able to help you with the application process. Some states require that you apply to several car insurance companies before applying to the state's assigned-risk pool. You will be accepted into the pool if each provider has denied you coverage.

While assigned-risk pool insurance ensures that you can get coverage, it is significantly more expensive than standard car insurance. Coverage options may also be limited, and you may not be able to purchase collision and comprehensive insurance in some state pools.

Understand why your policy was cancelled

Understanding why your auto insurance policy was cancelled is important as it can help you prevent future cancellations and allow you to take the necessary steps to reinstate your coverage. Here are some common reasons why your auto insurance may have been cancelled:

Non-payment of Premiums

Insurers commonly cancel policies due to missed payments. If you fail to pay your premiums, you will typically receive a legally required notice of cancellation from your insurer, allowing you a grace period of around 10 to 20 days to make the payment before the policy is officially cancelled.

Fraud or Misrepresentation

Insurance companies may cancel your policy if they discover fraud or misrepresentation in your application or claims. This includes lying on your application or omitting important information, as well as filing fraudulent insurance claims.

Suspension or Revocation of Driver's License

If your driver's license is suspended or revoked, your auto insurance policy will likely be cancelled. This is because a valid driver's license is typically a requirement for maintaining an active insurance policy.

High-Risk Factors

Insurers may cancel your policy if they deem you to be a high-risk driver. This could be due to frequent insurance claims, expensive claims payouts, owning high-performance or altered vehicles, or a combination of these factors.

Policy Lapse

If you have a lapse in coverage, meaning there is a gap in your insurance history, insurers may view you as a high-risk client and either increase your premiums or cancel your policy. This can happen if you fail to pay your premiums on time or if you switch insurers and there is a gap between policies.

Health Issues

In some cases, your insurance may be cancelled due to health problems that could impact your driving ability. For example, if you are diagnosed with a seizure disorder, your insurer may cancel your policy.

Policy Duration

If your policy has been in force for fewer than 60 days, insurers may have more flexibility to cancel your policy for a variety of reasons. After this initial period, cancellations typically only occur for more specific reasons, such as non-payment, fraud, or license suspension.

State-Specific Reasons

Different states may have unique laws and regulations regarding auto insurance cancellations. For example, some states may allow insurers to cancel policies for specific reasons, such as age, or due to changes in an individual's credit score.

It's important to understand the specific reason why your auto insurance was cancelled so that you can take the necessary steps to rectify the situation and maintain continuous coverage. Continuous coverage is crucial to avoiding higher premiums and ensuring you can legally drive your vehicle.

Ask your state for help

If your auto insurance company refuses to reinstate your policy, you can ask your state for help. Each state has a department of insurance that can assist you with insurance appeals. For example, in Illinois, the Department of Insurance holds hearings for insurance appeals. This is particularly helpful if your policy is being cancelled or not renewed due to excessive claims or a complicated driving record.

Your state's department of insurance can also refer you to companies that sell non-standard car insurance for high-risk drivers. These companies may be more willing to insure you despite your driving record. However, non-standard companies may not offer the same level of coverage you once received from a major insurer. For example, coverage may no longer extend to rental cars or permissive users.

As a last resort, you can join your state's assigned-risk pool. 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. However, expect to pay much more for assigned-risk pool insurance than you would for standard car insurance.

Frequently asked questions