State laws protect consumers from having their auto insurance policies cancelled during their policy period, and also without a specific and acceptable reason. Auto insurance companies must comply with state laws that dictate when coverage can be cancelled and the reasons for such an action.
Policy Cancellation vs. Nonrenewal Notice
There is a big difference between a cancellation and a nonrenewal. The most important distinction is in the timing.
A cancellation, which occurs during your active policy period, is an extreme action and can only be taken if the legal restrictions are met. On the other hand, a nonrenewal notice is sent when your policy period is ending and before you sign up again. This time period has fewer legal restrictions and there are a wide range of reasons you may receive a nonrenewal notice. And, the reason may have nothing to do with you or your driving. For instance, a nonrenewal could happen when a company decides not to provide coverage in your area anymore
If a nonrenewal does relate to your driving, it is usually because of something serious such as a DUI. Many companies drop drivers once they have been convicted of such an offense.
No matter the reason behind the nonrenewal, your insurance company is required by law to inform you that they intend to discontinue the policy at the end of the policy period.
What Are the Reasons Your Policy Can Be Cancelled?
There are legitimate reasons that your car insurance company might move to cancel your policy. These include:
- Submitting fraudulent claims
- Lying on your insurance application
- Not keeping your vehicle registered
- Having your driving license suspended or revoked
- Not paying your premiums
Here’s What Happens When Your Insurance is Cancelled
The first thing is that you become illegal in most states if you continue to drive. Most states require drivers to have at least the minimum coverage for car insurance and if you drive after you’ve been cancelled you could be facing heavy fines and extreme costs should you have a car accident. An accident without coverage can lead to financial ruin.
This is why you must correct the situation, no matter the reason for cancellation, or stop driving altogether.
What Should You Do If Your Car Insurance is Cancelled?
First, if you think your car insurance has been cancelled unjustly, you can fight it. Contact your state’s insurance department. You can learn about the law and file a complaint if you still think you should not have been cancelled.
The next thing you should do right away is get a new policy, especially if you will still be driving. And the best way to find the best rate, even after a cancellation, is to shop around.
The InsuranceWins form can get you started. You may see higher quotes after a cancellation but by comparing quotes from different carriers, you’ll be able to ensure you’re paying the lowest price for the type of coverage you need. Let us help you shop for a new policy right now!