UPDATED: Mar 13, 2020
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Getting a car insurance policy should be a simple matter. Unfortunately, there are many complicated things that you might not be aware of, especially if it’s your first time getting a policy.
Because there are different types of car insurance (fully comprehensive versus third party, for example), there are countless different things that can affect your policies. There are also many differences in policies from one company to the next.
One question, for example, that you might find yourself wondering, is whether your car insurance policy will be canceled if you get into an accident.
What Happens After an Accident
If you already have car insurance, then your car insurance policy may be canceled or it may continue if you get into an accident. Not very helpful I know, but it really all depends on the precise terms of the policy that you took out and on the nature of the company that you took the policy out with.
Most car insurance companies will not cancel but will rather simply not renew. That means that once your policy has run out, you’ll then not have the option to continue with the same policy.
In rarer cases, however, cancelation may occur but insurers are only permitted to do this as long as you have not had the policy for more than 60 days. If the policy is shorter than that, then you might find that your policy gets terminated, especially if the accident was very severe and if it was perceived to be your fault.
If the insurance company decides that they will not renew your policy, then they will need to give you 10-30 days’ notice before they terminate the agreement. This should give you time to shop around and to find out.
If you are unsure as to how your insurance company is likely to go ahead, then try reading the fine print that was included when you first took out the policy. If that is not clear enough, then consider calling and simply asking how they normally proceed in those circumstances. Enter your zip code below to view companies that have cheap auto insurance rates. Secured with SHA-256 Encryption
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Why Your Policy May Not Be Renewed
If your policy is not renewed, then that means you’ll be left without a policy at the end of your contract and you’ll need to start looking for a new one once you get the notice.
Why do companies do this?
Usually, this happens if, following your accident, you no longer fall within the target demographic of the company offering insurance. Auto insurers want to offer insurance policies to drivers that they think will be safe on the roads because they will be better investments. For an insurance company, the ideal scenario is that you take out insurance, pay them a monthly premium, but then never actually claim on the policy. That then means they’ve received money for nothing (except providing you peace of mind).
This is why individuals that have had fewer accidents will be more likely to get cheap car insurance than those who appear to be more prone to collisions.
Some insurance companies will take another approach though and will offer their policies to people who other companies won’t insure. That then gives them a captive market, helping them to find more business and get more patronage. However, they will then afford those high-risk policyholders by charging more for each one of them.
While you find companies at either end, you’ll also find companies that provide their business to the whole spectrum of clients and simply adjust their prices accordingly. If your insurance provider is in that category, then you should find they offer you a new policy with an increased rate.
But if your insurance provider prefers to cater only to low-risk customers, then you might find that your policy is non-renewed and you are not given the option to stay with them. And if your insurance policy is less than 60 days old, then it may be canceled entirely!
What to do At the End of Your Policy
If you reach the end of your policy and find you have been non-renewed, then you’ll need to find another company to offer you the new insurance. Make sure to shop around, use price comparison sites and enter as much detail as possible.
But what if the policy is auto-renewed? In that case, you still need to shop around. The risk here is that if the company is one that will be likely to put up its prices when you lose your no-claims or have an accident, then you could end up paying over the odds. Make sure that you don’t just stick with your current provider in the interest of convenience – compare different quotes and go with what works for you best at that given time.
Does Your Policy Always Go Up In Price After An Accident?
Keep in mind though that it is actually a myth that your car insurance will always go up after an accident. For example, if the accident was the other driver’s fault, then all of the costs will be paid by them and that means that you should not have to claim on your own insurance – hence your own premiums won’t go up.
Another thing to keep in mind is that your car insurance might already be at the most expensive rate! If you have had a lot of accidents in the past and this is the latest in a long line, then there’s a chance that your premiums will stay exactly as they are (though this still isn’t ideal!).
In other cases, a car insurance company might overlook an accident if it is minor. You will also sometimes have the option to pay in order to protect your no claims.
In conclusion, your policy shouldn’t be canceled after an accident if it is more than 60 days old. It’s more likely that your policy will be non-renewed, in which case you will have 10-30 days notice in order to find a new policy. At any rate, it is always important to be vigilant when it comes to checking your rates and comparing them to other companies!