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What happens when car insurance is canceled?

If you’re considered a high-risk insurance client, most companies will insure you and your vehicle — but it may come at a cost. If a higher premium won't cover the risk, your insurance company could cancel your policy outright.

The tricky part is what comes next: many companies have the same guidelines that dictate to whom they will sell insurance coverage. If GEICO cancels your coverage because you’ve had too many claims, you might not get able to get coverage from Progressive for the same reason.

Let's look at some common reasons an insurance company might cancel a policy and the steps to take in search of an affordable insurance policy.


Why do car insurance companies cancel policies?

An insurance company may drop a client if the driver violates the stated terms and conditions of the policy.

Below are some common circumstances in which an auto insurance policy could be canceled:

Minor infractions may not trigger insurance policy cancellation. Forgetting to sign a document may result in an insurance company reinstating coverage after the oversight is addressed.

If, however, a driver fails to turn in documentation of previous insurance history because they don’t have any insurance history, it could result in denial of coverage. Many companies require customers to carry six months of continuous coverage to be eligible for a policy.

cancelation

Car insurance cancellation laws: is it legal for an insurance company to drop coverage?

Although auto insurance is required in nearly every state, an insurance company has the legal right to cancel a policy if the insured driver violates the terms and conditions stated in the original contract.

If a driver breaks policy guidelines, the insurance provider may act within its legal rights and self-interest to deny coverage at the time of policy renewal or cancel the policy immediately. At this point, the burden of finding a new car insurance policy falls on the driver.


What to do after auto insurance is canceled

You have a few options after your coverage is revoked. First, get a clear answer as to why your policy was dropped. If it was a result of a minor infraction such as a missed payment or failure to turn in a document, the company may allow you to restart your coverage.

If your policy was canceled and you’re unable to reestablish it, consider a non-standard car insurance company. Many major insurance companies carry the same thresholds for uninsurability. Meaning, if Progressive issued you a non-renewal because of your frequent claims, Allstate might not issue you a policy for the same reason. However, non-standard companies might be more willing to insure you despite your driving record.

non-standard auto insurer is an insurance company specifically designed for drivers with high-risk rating factors. Bear in mind non-standard companies might not offer the same level of coverage you once received through a major insurer. This could mean coverage no longer extending to rental cars, to “permissive users” — people who use your vehicle irregularly but would be covered in the event of an accident — or other circumstances. It’s important to read the fine print to understand what is and is not covered before purchasing a policy and paying your insurance premiums.


How to buy insurance after a car insurance policy cancellation

Just because one insurance company didn’t want you as a customer doesn't mean they all won't.

Comparing auto insurance quotes from as many companies as possible will help you find the best car insurance rate after your policy cancellation. The Zebra makes it easy to compare rates from popular auto insurance companies — standard and non-standard alike — in search of a great auto policy.


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How to cancel car insurance

The process of canceling your current policy is fairly straightforward. While some of the more technologically-inclined insurance carriers out there may allow you to cancel your car insurance online, oftentimes a simple phone call is most efficient. If you’re unsure of how to cancel your coverage, the steps below outline the cancellation process for most companies. 

Call your insurance company or agent
Call your insurance company or agent

Your insurance agent can go over any specific requirements for canceling your policy, including any fees or refunds. It's likely that you will need to provide your policy number and other relevant information at this time. Most companies will offer a prorated refund on premiums already paid. Other companies may charge a cancellation fee. 

Sign/send any required documentation
Sign/send any required documentation

If your current insurer requires a written cancellation notice, your policy may not be canceled until they have received it. It's important to return any cancellation forms promptly to speed the process along. 

Get notice of cancellation
Get notice of cancellation

This is the confirmation from your insurance company that your policy has been canceled. Make note of the effective date of your cancellation to ensure that you do not go without coverage, i.e., an insurance lapse.

Cancel automatic payments
Cancel automatic payments

Those who have set up autopay through their banking institution should make sure to cancel all future payments. 

Contact your bank/lender
Contact your bank/lender

If you are financing your vehicle, it’s a good idea to let your bank or lienholder know you’ve switched insurance companies, as some will require you to carry certain types of physical damage coverage.

Have a new insurance policy in place
Have a new insurance policy in place

Unless you are completely giving up driving, it’s important not to have gaps in your insurance coverage. This can lead to increases in your auto insurance rates, not to mention that being an uninsured driver puts you at risk of being personally liable for any damage you cause in an accident. If you plan on driving again in the near future, consider purchasing a non-owners policy from your new insurer that can keep you from paying a higher rate on future policies. 



Recent Questions:

How do I cancel my insurance policy?

No, you will not be committing insurance fraud. You don't have to give a reason for canceling your policy at all.
Jan 31, 2019 Cincinnati, OH

How do I cancel my mom's car insurance policy after she passed away?

Since you are the executor of her estate you have some legal authority to handle her active insurance policies. Before you contact the insurance company, make sure to have her policy number and a copy of her death certificate on hand.
Mar 12, 2017 Redmond, WA

If my Alabama registration tags expire, do I still have to carry insurance?

Alabama requires that registered vehicles must also be insured. If your registration tags expire and you want to renew them then you must have active auto insurance before the new tags will be issued.
Aug 12, 2017 Tuscaloosa, AL

If I cancel my insurance is there a grace period after cancelation?

Sorry about your situation. Unfortunately, there is no grace period around dates.
Dec 8, 2019 Spring, TX

Renata Balasco
Renata BalascoAssociate Content Strategist

Renata is a licensed insurance professional and content strategist responsible for creating home and auto insurance guides for The Zebra.

Renata's background in technical writing and her experience working in the insurance industry informs her work. She holds a bachelor’s degree in communications.

Renata's work has been cited by Car and Driver

About The Zebra

The Zebra is not an insurance company. We publish data-backed, expert-reviewed resources to help consumers make more informed insurance decisions.

  • The Zebra’s insurance content is written and reviewed for accuracy by licensed insurance agents.

  • The Zebra’s insurance content is not subject to review or alteration by insurance companies or partners.

  • The Zebra’s editorial team operates independently of the company’s partnerships and commercialization interests, publishing unbiased information for consumer benefit.

  • The auto insurance rates published on The Zebra’s pages are based on a comprehensive analysis of car insurance pricing data, evaluating more than 83 million insurance rates from across the United States.