Can your car insurance company drop you?
Insurers can cancel policies or choose not to renew at the end of a policy term. Non-renewal can occur after multiple accidents or filing too many claims. At the same time, more immediate cancellations can result from serious issues like loss of driving privileges or insurance fraud. Luckily, many insurers still accept customers who have had a policy cancellation or non-renewal but be prepared to pay a higher rate.
Why can my car insurance company drop me?
Car insurance companies can legally drop a customer if they become riskier to insure than when they first bought their policy. But that doesn't mean they let go of customers for just any reason — if you practice safe driving habits and pay your premium on time, the chance of losing your car insurance is slim.
There are two ways insurance companies can end a customer's policy: through non-renewal or cancellation. Non-renewal means the insurance company will see out the rest of your policy term but let you go as a customer after that. With cancellation, the insurance company may be required to give advanced notice in writing, but they can cancel the policy effective on a specific date prior to the expiration of the policy term in certain situations.
What situations can result in car insurance non-renewal?
Common reasons for auto insurance non-renewals vary by state and insurer and include multiple accidents and too many insurance claims.
Multiple accidents within a three-year window
Insurers generally pay more attention to accidents where you're at fault versus those where someone else is at fault. However, being involved in too many collisions (even ones where you weren't at fault) can be a red flag to insurers.
Too many insurance claims
If you file claims often your insurer may view you as a greater risk, which may lead them to non-renewing your policy.
Insurers may not drop a customer after their first one or two incidents. The first step is often to increase your car insurance rate. From there, if a customer has another accident or files more claims, the insurer may send a notice that they won't be renewing the policy at the end of its term.
What events can cause car insurance cancellation?
An insurer can choose to cancel a policy before reaching the end of the term, though the permissible reasons may vary by state.
Being convicted of a DUI offense
Once a driver is convicted of driving under the influence of drugs or alcohol, they're seen as high risk. Some insurers may choose to drop a customer after they receive a DUI. Learn about insurance after a DUI.
Loss of driving privileges
When someone isn't fit to drive or doesn't hold a valid license, their car insurance may be canceled. The loss of driving privileges can result from a DUI or other serious driving infraction, or it can be based on a medical condition that impacts the person's ability to drive safely.
Late payments or failure to pay insurance premium
Some insurers may charge a late fee if a payment is late. If it becomes a consistent problem, or if you fail to pay your premium, you may receive a cancellation notice from them.
Insurers generally have a zero-tolerance policy when it comes to insurance fraud. They'll likely cancel the policy of anyone who lied when initially applying for the policy or who was caught filing a fraudulent claim.
How many accidents can you have before your insurance drops you?
Each case is unique, and different insurers have their own criteria for determining how many accidents is too many.
My car insurance company dropped me — now what?
First, start shopping around for a new policy as soon as you learn your old one isn't being renewed or was canceled. It's illegal to drive without insurance in nearly every state. Additionally, having a lapse in car insurance coverage between policies may mean more difficulty in getting a new policy and higher rates when you do.
Getting car insurance after non-renewal is easier than getting it after a cancellation. Many of the major insurance companies will accept customers whose previous insurer didn't renew their policy. Just be prepared for a higher rate than you were paying before. If your car insurance company dropped you, it's still possible to get some form of insurance even after a severe infraction like a DUI.