No matter what is the cause, a lapse in automobile insurance coverage is a situation you should rectify as soon as possible. Not having it is a large financial risk; you may even be subject to fines, jail time and criminal charges in certain states. Who has done it or why it has happened is secondary to the fact that you currently take too many chances.
Still it helps to know the full circumstances that led to cancellation. Then, it becomes clearer what to do, if you need or want another policy and how much it would cost to reinstate the old one where possible. Let’s have a look at each situation and see what to do in each case to make sure we don’t break the laws and take huge risks.
Why Would Policyholder Cancel Car Insurance?
There are very few ‘good’ reasons why you would ever want it. If you plan to sell the vehicle and are not replacing it you may not need it anymore for some time. You may be going out of the country for an extended period of time. Or you may not have to keep it in certain states if you have the financial ability to prove you can meet the costs of an accident and liability claims.
If you simply cannot keep up with the costs, but want to continue driving you might want to rethink it. What happens if you get caught is explained in that post in detail. It has real consequences and in the long term would cost you more money than simply paying the monthly premiums. Again read what happens if a policy lapses before doing anything.
It could be more sensible to reduce coverage than to give it up altogether and risk hundreds or thousands of dollars in fines, spending time in jail, having the vehicle impounded or losing the privilege to drive, not to mention the large increase in premium when you want it back. You can check for cheap liability only coverage right here that will keep you legal and financially sound.
Why Would Carriers Terminate Auto Insurance?
There are only a few standard reasons why they would typically stop a policy mid-term. The first one is obviously default on premium installments. It would be better to discuss it, switch for a cheaper option or even lower coverage instead of simply ‘not paying the bill’. They will also cut off those committing fraud at the first chance.
If you have your license revoked or suspended for driving under the influence of alcohol or drugs or you have been convicted of a major moving violation such as reckless driving, vehicular manslaughter or others there is a possibility that you will face a termination. Lastly the coverage may be dropped because they learned of health conditions that severely impair the ability to drive, such as epilepsy and late state diabetes.
If auto insurance is cancelled due to non-payment of premium you may be able to get it reinstated. However, you may have to pay the full outstanding amount to do so with some carriers as they may stop any instalment arrangements because of the default.
As soon as you receive a notice to terminate coverage you should start searching to find a replacement, if you still can and want to continue. Depending on the reason you may find it hard to get covered again at a reasonable price. In such cases, you may need to talk to state ins. department to guide you through.
It is a process in which they let you know that they will stop the coverage at the end and that you will need to find a replacement. They will usually give you enough time to find another source. The three biggest reasons for denied renewal include a poor record, multiple at-fault claims or you have moved out of state.
Sometimes companies may change their risk profile or withdraw certain markets and that may be why policyholders don’t get offered quotes once the current term is over. If that is the case you may not have much problem finding alternatives. If you are receiving renewal refusal notice because of a claim or checkered history you should be prepared to shop online to find an affordable quote.
Difference between Auto Insurance Cancellation and Non-renewal
Both are bad news. However, the latter may be an inconvenience but the former is a hindrance when you want to get re-insured by another company. Essentially, the former suggests that you have done something to force the provider to take drastic action. Although the latter also means that they want nothing to do with you anymore but this is done at an opportune moment not to cause any trouble for both parties.
Since both companies and policyholders are allowed to walk away at the interval, non renewal isn’t a huge problem. But cancellation suggests that you have done something bad for a mid-term action.
Today a few proposal forms ask new applicants if their policy has ever been ended prematurely because they don’t want to take on someone who has been dropped before. Furthermore, they can probably check it anyway since they are all connected these days. You can still find another company but this time you are likely to be categorised as a “high risk driver” that will increase quotes.
Cost Consequences of Cancelled Auto Insurance Policy
Pricing consequences on the next purchase can be wide ranging and depends on the problems that lead to this juncture. In most cases, there is a high chance premiums go up and it may be a lot. Generally the reason for it is directly related to the exposure that the carrier has to take on.
If you have a poor driving record, have defaulted on payments, had DUIs, or have serious health impairments, the company is taking a larger risk to insure you and therefore you can expect to pay more. If you have moved out of state and that is why you had to do away with the old, often premiums will not increase, except if the new location has higher rates.
If it is because of ‘negative’ reasons, it is even more important to get as many quotes as possible. Companies specialize in different areas, demographics and clientele. By using our tool above you can get many quotes all at once from one easy process to ensure you are getting the best possible price.
Usually it is not difficult to see a large premium hike or refusal to continue coming. Don’t wait to check alternatives until you get the notice. Be proactive to switch instead of being reactive by starting to look around when you are told to go. The same applies in the other case.