No one wants to hear that their insurance company can no longer insure their car. However, this happens more often than many think. You need to know what to do if you lose your car insurance.
There are two ways that your auto insurance company may decide to drop coverage: nonrenewal or a cancelled policy. Nonrenewal is when your insurer opts out of renewing coverage after your policy term ends.
There are many reasons for nonrenewal. It may be a business decision or maybe you’re a high-risk customer. Or maybe you’ve made too many insurance claims.
Cancellation is more severe and is when an insurer stops coverage before the end of the policy term. There are state laws that dictate when an insurer can and cannot cancel your policy.
If you find yourself without car insurance due to nonrenewal or cancellation but need a new policy, here are some things you can do.
Nonrenewal: Start Shopping
Nonrenewal isn’t always your fault. Sometimes an insurer may choose to not renew your policy for reasons that have nothing to do with you or your driving record. For instance, maybe the company wants to write fewer policies in your region. Or maybe they’re phasing out a certain kind of coverage.
Whatever the reason, your insurer must notify you in advance of a nonrenewal. How far in advance you’re informed is based on where you live. In California, insurers must provide a written notice at least 30 days before the policy term ends, or 20 days if nonrenewal is due to failure to pay.
In the event of a nonrenewal, the best thing you can do is to find coverage from another insurer. There is no stigma associated with being nonrenewed, so there will be no impact to your future car insurance costs.
Canceled Car Insurance: Be Prepared to Pay More
Because cancellation is due to your behavior, it’s much more problematic and complex to handle. Insurers typically cancel policies of customers who:
- Don’t pay their premiums
- Have several accidents and/or moving violations
- Misrepresent themselves on their applications
- Are convicted of DUIs
- Have their license suspended or revoked
Just like a nonrenewal, insurers must provide advanced notice. In California, if the reason is nonpayment, insurance companies must deliver a cancellation notice no less than 10 days before the effective date. The notice must be provided 20 days prior for any other reasons. Any unused premiums will be refunded
So what do you do if you receive a cancellation notice? Deal with it immediately. Otherwise you risk a policy lapse and being uninsured.
Be prepared to have less options available to you and to pay more for coverage. Chances are that standard insurance carriers won’t cover you, which means you’ll need to get coverage through the nonstandard market.
Depending on why the policy was cancelled, your premium may increase anywhere from 10% to 50% than what you were previously paying.
Can You Fight It?
It depends. If you believe that your nonrenewal or cancellation is unjust, call the insurance company or your agent to get further details. The best-case scenario is that it was a misunderstanding, and the problem can be easily fixed.
If you believe your insurer is treating you unfairly, contact your state insurance department.
Other Insurance Options
What if you’re unable to resolve a policy cancellation? You’ll need to quickly become acquainted with the nonstandard market. According to the Insurance Information Institute, about 1/5 of the auto insurance market is made up of nonstandard policies.
This market is for drivers whose policies were cancelled due to payment issues, poor driving history, or application misrepresentation. The nonstandard market is also serves:
- Very young and very elderly drivers
- Those with bad credit
- Owners of exotic vehicles
- People with lapsed coverage
- Immigrants with no U.S. driving history
Specialty and major insurance companies offer nonstandard policies. For example, Nationwide, one of the bigger insurers, owns Titan and Victoria, both of which are nonstandard insurers. American Family Insurance owns The General.
If you don’t qualify for a nonstandard policy, apply to your state’s last resort insurance plan. A group known as AIPSO provides a list of these plans by state. While this isn’t ideal, it’s sometimes the only option.
The good news is that tomorrow is a new day. Accidents, tickets, DUIs, and other marks on your record eventually fall off. In just three years, you may be eligible for standard insurance coverage.
In the meantime, it’s best to stick to your p’s and q’s. Maintain a clean driving record. Take a defensive driving course. This shows insurers that you’re being proactive and that you want to be a safe driver.
No one enjoys getting a breakup letter, especially one from your car insurance provider. Though the news isn’t easy to hear (or read), nonrenewal or cancellation doesn’t have to make life more complicated.
Just remember, driving uninsured, even for just a few hours, is never an option. Find a way to get insured so that you can stay on the road.
Car Insurance Cancelled, Who Will Insure Me?
There are many insurers to choose from. The reason your policy was cancelled may make it harder to find new coverage, and you can all but guarantee that your new policy will be more expensive.
Where Can I Find the Cheapest Auto Insurance For a Suspended License?
There are several insurance companies, including State Farm and USAA, that will insure drivers who have a suspended license citation. The best option is to shop around for companies that offer high-risk auto insurance.
Can I Reinstate a Cancelled Car Insurance Policy?
It depends on why the policy was cancelled. If it was cancelled due to nonpayment, you can pay what you owe and then your insurer may reinstate the policy. However, you can expect to pay higher premiums.
What is Guaranteed Renewable Auto Insurance?
A guaranteed renewable policy is a policy in which the insurer is obligated to continue coverage, assuming that premiums are paid on time.
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