Can My Insurance Company Cancel My Car Insurance Policy?

In some instances when an insurance company may cancel your car insurance policy. A canceled car insurance policy will leave you financially exposed to paying out-of-pocket expenses if you are involved in an accident. You can also face penalties like fines, a suspended driver’s license, and registrations, and even higher premiums on future insurance.

Common Causes of Policy Cancellation

There is a distinction between a canceled policy and a policy that is not renewed. A canceled policy happens before the policy term expires. A nonrenewal simply means that the policy expired and was not renewed. There are numerous of reasons why an insurance company may cancel your policy, including:

• Lack of payment –Insurance premiums are just like any other bill. If you fall behind, your policy will eventually be canceled and you will be uninsured. Before your policy is canceled, your insurance company will contact you and let you know that they have not received payment. Be sure your insurance company has your correct contact information to avoid missing a cancellation warning.
• Fraud – When someone deceives an insurance company for financial gain, it is known as fraud. When an insurance company spots fraud, the police will likely be canceled. The perpetrator can even face criminal charges.
• Loss of License or Conviction for Major Moving Violation – If you commit a crime, like drinking and driving, and lose your license, your insurance company may cancel your policy until your driving privileges are restored. Being involved in a high number of crashes that were your fault could also lead to your policy being canceled.
• Health Issues – If you suffer from a health issue that impairs your ability to drive, your policy could be canceled. For example, if a driver is diagnosed with epilepsy and does not provide proof that the condition does not impair driving, the insurance company could cancel the policy.

Above are some of the most common reasons why an insurance policy is canceled. It is important to remember that your insurance company wants to keep you as a customer. If you pay your premium on time and driving safely, it is unlikely a policy cancellation will occur. However, if you find that your insurance policy has been canceled, be sure to find out why.

What Should I Do If My Policy is Canceled?

If your car insurance is canceled, it is important to find new coverage as soon as possible to avoid being an uninsured motorist. If you continue to drive without insurance and are involved in an accident, you may be responsible for paying any post-accident expenses out of your own pocket.

When your insurance policy is canceled, the insurance company is required to alert the Department of Motor Vehicles. If you are unable to or choose not to find new coverage, the state may require you to turn in your vehicle’s registration and surrender your driving privileges. This is the state’s effort to keep uninsured drivers off the road.

There are instances when insurance may be unfairly canceled. If you believe that the insurance company acted inappropriately and canceled your policy without just cause, it is helpful to consult with an attorney.