Don't go too long without a car insurance policy — it could hurt you in the future.
If you’re seen as a high-risk insurance client, most companies will insure you and your vehicle — but it will cost you. If an elevated 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 examine some common reasons insurance companies might resort to canceling a policy and the steps to take in search of an affordable new policy.
Although auto insurance is required in nearly every state, an insurance company has the legal right to cancel a policy if you violate the terms and conditions stated in the original contract.
If you break your policy guidelines, the insurance company may act within its legal rights and self-interest to deny coverage at the time of policy renewal or cancel your policy immediately. After this point, the burden of finding a new car insurance policy falls on you.
An insurance company may drop a client if they violate the stated terms and conditions of the policy.
Here are some common circumstances in which 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, you fail to turn in documentation of previous insurance history because you don’t have any insurance history, you could face denial of coverage. Many companies, such as Farmers, require customers to carry six months of continuous coverage to be eligible for a policy.
You have a few options after your coverage is revoked. First, ensure you have a clear answer as to why your policy was dropped. This way, if it is something small such as missing a payment or failing to turn in a document, you can make amends and 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 non-renewed you because 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.
A 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.
Just because one insurance company didn’t want you 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 cancelation. The Zebra makes it easy to compare rates from popular auto insurance companies — standard and non-standard alike — in search of a great new insurance policy.