UPDATED: Mar 13, 2020
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If you want to drive in the United States, you need to be insured. While it’s pretty easy to get car insurance, it’s also pretty easy to lose it. Every single day in this country, people are dropped from their auto insurance coverage. To be sure you don’t meet the same fate as these unfortunate drivers, it’s crucial that you know how and why you can get dropped.
Common Reasons People Are Dropped From Insurance
Car insurance companies can and will drop you under certain situations. The most common reasons that lead to dropped policies include: you were late on an insurance payment, you lost your license, or you provided false information when applying for your policy (misrepresentation). While these reasons are the most common, they are not the only reasons why an insurer can drop your coverage. We will delve deeper into some of the other reasons later on.
During the first two months of your auto insurance policy, your insurer is allowed to cancel your coverage for whatever reason they feel like. In the United States, insurance is regulated at the state level, so realize that every state is different. But in most states, insurers can cancel your policy within its first 60 days of being in effect for any reason they want.
After these 60 days are up, the insurer needs to have a valid reason in order to drop you from coverage. The following reasons are some of the more common ones:
Not Paying Your Premium
Realize that your insurance policy is an agreement between you and your insurer. The insurer will provide you insurance in exchange for money. If you do not hold up your end of the bargain, there is no reason for the insurance company to hold up their end of the deal. In other words, if you do not pay your premium, you will be dropped!
Many insurance companies will allow the policyholder to make good on their missed payment and have their policy reinstated, but this all depends on the insurance company. There is no law that requires the insurer to do so. Depending on the state you live in, the insurance company can drop your coverage the minute you fail to pay your bill.
Therefore, if you ever miss your premium payment, it might be a good idea to keep your vehicle parked for the time being. Driving without insurance for whatever reason is illegal in the United States. If you get into an accident during this time, you could be in hot water.
You Have Many Moving Violations
If you start getting a lot of traffic violations, your insurance company may choose to end their agreement with you. Realize that auto insurance companies determine your premiums by looking at their complex algorithm and then deciding your rates. It’s all about calculating risk. If they decide, after your 10th speeding ticket in two months, that you are simply not worth the risk anymore, they could drop your coverage.
If you had too many moving violations during this period of your policy, you might not be eligible for renewal. Usually, the insurance company will notify you at the end of your policy that they are opting to not renew you.
Too Many Accidents
Getting into accidents can actually increase your chances of being dropped by your insurance provider. If you are not at fault in an accident, and file a claim, the insurer will probably not drop your insurance or increase your premiums. If you are at fault, and file a claim, you will most likely see an increase in your insurance rates once it comes time to renew your policy. In some rare situations, if you file several claims, the insurance company might drop your coverage or increase your rates to the point where they are unaffordable.
If you are in an accident that is your fault AND you were under the influence of drugs/alcohol or results in a suspended license, the likelihood of your insurer dropping your coverage is increased. If the insurance policy is cancelled for these reasons, realize that it will be extremely difficult to find a new policy that will provide affordable coverage. This is another reason why it is extremely important never to drink and drive or drive recklessly.
Lying On Your Application
If you are issued a policy from a car insurance company and then are found out to have been lying about anything on the policy, you are at risk of being dropped. This is called misrepresentation and can lead not only to having your policy cancelled, but also to legal issues.
If you happen to give false information to your insurance carrier – like how much you drive, where you park your car, who drives your car, the length of your commute, how many accidents you have been involved in – your insurance company could use this as reason to drop your coverage. Insurance companies do not appreciate being lied to. They need accurate assessment of your risk to them in order to provide appropriate coverage. When it comes to insurance, honesty is always the best policy.
What To Do If You Are Cancelled
If you are cancelled, you need to find new insurance coverage immediately. Like stated above, it is illegal to operate a motor vehicle in America without valid auto insurance. Fortunately, most states give you an average of 20-45 days to find new auto insurance coverage after your old coverage is dropped.
If you have been dropped, or are in danger of being dropped, it’s a good idea to start looking for a new insurance policy now. 4AutoInsuranceQuote is a great site for finding a new insurance company. Enter your zip code above or click the link below to get quotes from the leading car insurance providers.