Car Insurance for Canceled Policies

Don't go too long without being covered — it could hurt you in the future

What happens if my company cancels my policy?

If you’re seen as a high-risk insurance client, most companies will insure you and your vehicle for an exuberant fee. But if the premium does not negate the risk, your insurance company might cancel your policy based on what they see as a bad deal. The tricky thing with this is what comes next: many companies have the same redlines (read: guidelines) in terms of who they will and will not sell to. Meaning, 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. That’s where we come in. Let’s explore getting you insured after a canceled policy.

Here are our talking points:

  1. Is it legal for my insurance company to cancel my policy?
  2. What are common reasons for getting dropped?
  3. What are my next steps?
  4. How can I find insurance after a canceled policy?

Is it illegal for my company to drop me?

Although it insurance is required in nearly every state, an insurance company has the legal right to cancel you if you violate the terms and conditions stated in the original policy documents. These reasons, which we will discuss, will be pretty straightforward. But if you do break them, your insurance company will be acting within their legal rights as well as their self-interest to either deny your coverage at your policy renewal and/or cancel your policy. After this, the burden of getting new insurance will fall on you.

Why would my insurance company drop me?

As we stated, your insurance company can drop you if you violate the terms of conditions of your policy. Here are some commons violations:

  • License suspension
  • Frequent claims
  • High claims payout, especially bodily injury/medical payments
  • Owning high-performing or altered vehicles
  • Failure to provide necessary documentation
  • Any combination of all of the above

Depending on what documentation you fail to turn in, this might not be a death sentence with your insurance company. For things like forgetting to sign a document, your insurance company will most likely reactivate your policy after you sign the document. If, however, you fail to turn in documentation of previous insurance history because you don’t have any insurance history, you could be denied coverage from that company. Many companies, such as Farmers, require you have 6 months of continuous coverage in order to be insured by them.

What happens next?

You have a lot of options after your coverage is dropped. Firstly, make sure 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 a document it, you can make amends and get your coverage back.

If your policy was canceled and you’re unable to reactivate it, you should consider non-standard companies. As stated, a lot of popular companies have the same thresholds for uninsurability. Meaning, if Progressive non-renewed you because of too many claims, Allstate might not issue you a policy for the same reason. Because of this, non-standard companies can be helpful to you.

A non-standard company is, to put it simply, an insurance company specifically designed for drivers with high-risk rating factors. Bear in mind, however, that with non-standard companies, the same coverages you had once received might not be available to you. This could mean coverage not longer extending to rental cars, to “permissive users” — A.K.A people who use your vehicle irregularly but would be covered in the event of an accident — or other less than standard qualities. It’s always important, regardless of your company, to read the fine print thoroughly in order to understand what you are and are not covered for.

Now what? Buying insurance again

It’s important to consider that just because one insurance company didn’t want you, doesn't mean they all won't. Shopping around with as many companies as possible will help make sure you’re finding the best insurance rate after your cancelation. Only with The Zebra can you compare hundreds of different companies at once — standard and non-standard alike. We’ll get you covered again.

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