Auto insurance is necessary but certainly not easy to get. That is why you need to do what you can to maintain it. If you don’t have insurance, you are breaking the law; if you get caught without it, then you face severe penalties, such as impoundment, jail time, and fines. You do not want that.
Unfortunately, some circumstances lead up to you opening a letter from the insurance company telling you that your policy has been canceled. It’s a terrifying reality. How can you get on if you can’t drive insured? What happens from here?
Don’t panic. There are steps you can take to understanding why you have received a cancellation notice from your insurer and ways to continue your coverage. Keep reading to learn more.
Why You Received a Policy Cancellation Letter
Every state has its own rules and regulations involving auto insurance, but most agree that missing a premium payment is worthy of cancellation. Yet, it is highly unusual to receive such a letter. Though insurance companies are free to drop policies within the first 60 days of a new policy, as soon as the policy hits day 61, the rules get much less flexible.
In other words, if two months into the policy have passed, there are only a couple legal reasons why auto insurance can be canceled.
Common Reasons For Auto Insurance Cancellation
Aside from nonpayment of a premium, here are other reasons why you received a cancellation letter from your insurer:
- You did not disclose essential information when applying. In order to give a rate, the insurance company needs to know where your car is garaged, who regularly uses the vehicle, and what kind of car you are driving. If you do not provide accurate information, it becomes material misrepresentation.
- You have multiple at-fault accidents or traffic violations. If you cause accidents or receive speeding tickets, for example, within a specific time frame (usually 36 months or 3 years), your policy may be canceled.
- You tried to commit fraud. Whether you submit a claim or someone else filed against you, you are expected to provide clear and accurate information.
- Your license or registration was suspended or revoked. If your driver’s license or vehicle registration gets revoked or suspended a few times within 3 years, the insurer may decide to remove you or another covered driver with the offenses from the policy.
- Your car is not safe. If you do not get your car inspected on time, the insurer may drop the policy. Also, if it is known your car has mechanical issues that are unsafe, your policy could be revoked.
- You are using your vehicle for business. Personal insurance policies are not meant for business. This also means you can’t use your car for things like Uber or Lyft without informing your insurance provider.
Nonrenewal vs. Cancellation
Did you receive a nonrenewal or a cancellation notice? Though the words sound similar, they are different. Here’s why:
- Cancellation: Happens during the middle of your policy. This is considered a last resort for the insurance company, which is why there are certain restrictions that limit cancellations.
- Nonrenewal: Happens at the end of your policy, before the beginning of a new one. This occurs during the interim, between periods of coverage. Nonrenewal happens more frequently, because there are less regulations. This typically means you have to find a new carrier.
Nonrenewal revolves around certain circumstances that make the insurer believe you are too much of a liability to continue coverage. For instance, if you have had several DUIs under their coverage, they may send you a nonrenewal notice.
Regardless, the insurer will inform you of the reasons why they chose to cancel or to not renew the policy. The time between the warning and when the policy is dropped differs depending on your state. For example, in New Jersey, a company must give you 15-30 days notice before canceling if you haven’t paid. You get 20 days for other cancellation reasons.
What To Do When You Receive a Cancellation Notice
A cancellation notice should not be unexpected. Most policies are canceled only in extreme circumstances, but this means that you will have some warning. Usually, the insurance company will have already reached out to you to try and assist with the issues.
For instance, if you have run into financial difficulties and missed a payment, the insurance carrier usually provides you with a grace period so you can catch up. Or, if your license was recently revoked, you can take steps to get your license back before the policy lapses. While you may not always be able to correct the issue, you can get in contact with your provider to learn more about your options.
Can You Get Car Insurance Again After Cancellation?
Yes, you can get auto insurance after receiving a cancellation notice. However, you should know that you will have to deal with higher premiums. Insurance companies check to see if you have been late with payments or if you have been canceled previously, since that helps them separate low-risk drivers from high-risk ones.
If you are between cars, one way to prevent a coverage gap is to enroll in non-owner car insurance.
That said, you also need to consider the reasons why you were canceled. Having a severe traffic violation or a long history of missed payments and at-fault accidents will make you less desirable to insurance carriers. Those who are struggling to get accepted by a preferred carrier can look at the non-standard market, which is full of lesser-known insurance companies.
If your auto insurance was canceled unfairly, you can contact the state insurance department to learn more. Be sure to research your state laws first. Should the cancellation be justifiable, you can expect to see increased auto insurance quotes when you begin shopping for another policy. But remember: Restoring auto insurance as soon as possible is important. It keeps you from being labeled “high risk.”
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