These are the words that no one wants to hear when an agent offers insurance: “We cannot provide coverage for your car.”
Your auto insurance company might drop you in one of two ways: Nonrenewal, or canceled car insurance. Your insurer may decide to end your policy term and not renew your insurance. The reason for nonrenewal could be business-related. It may also be due to the fact that your company considers you a more risky customer, perhaps because you have made insurance claims. Cancellation can be more severe. It occurs when an insurance company stops coverage for you before your term ends. The circumstances in which an insurance company can cancel your policy are often determined by state law.
Nonrenewal: Get started shopping
Your driving record might not be a factor in your insurer’s decision to cancel your policy. It might decide to cancel a particular type of coverage or write fewer policies in your area. Your insurer must notify you in advance, regardless of the reason. The time frame depends on where you live. California, for example, requires that an insurer send a notice of nonrenewal in writing at least 30 days prior to the end of the policy. Failure to pay is allowed up until 20 days.
This is a sign that you need to start looking for a better deal with another company.
Lynne McChristian, of the Insurance Information Institute (a trade group), says that “to be nonrenewed is not a stigma at all.”
Car insurance cancellation: Expect to pay more
Cancellation can be more difficult because it is a result your behavior. Customers who are:
- Incorrectly represent themselves in their applications
- Revocations and suspensions of licenses
- Convicted of DUIs
- Several moving violations and/or accidents
- Pay their premiums!
Insurers must give notice. California law requires that insurers provide cancellation notices at least 10 days before the effective date in case of nonpayment. If the cancellation is due to other reasons, the notice must be provided 20 days before the effective date. Any premium not used by your insurer will be refunded.
You will likely have difficulty finding coverage with other standard insurance carriers, and you will need to pay more for coverage in the “nonstandard market.” Richard Munoz, a Texas State Farm agent, says that depending on the reason you have been canceled, your non-standard premium could be 10% to 50% more than your standard premium.
To avoid becoming uninsured even for a brief time, you should immediately deal with a cancellation notice or nonrenewal notification.
Can you fight it?
It could be. You can call your agent to ask about unfair cancellations or non-renewals. Best case scenario: It is either a misunderstanding or something that can be fixed quickly. Munoz had an experience with a client who was not notified of her license suspension due to an unpaid ticket. She paid the fine, and she was reinstated to her coverage.
You also have the right to complain to your state insurance department if you think your insurer is treating you unfairly.
There are other options for insurance
What happens if you are unable to resolve a cancellation The non-standard market is your home. According to the Insurance Information Institute, these policies make up about one-fifth the market for auto insurance. Non-standard market people who have had their policies canceled due to application misrepresentation, payment history or driving record, very young and very old drivers, those with poor credit or lapsed insurance, immigrants without U.S. driving records, and owners of exotic vehicles.
Non-standard policies are issued by both specialty insurers as well as divisions of major insurance firms. Nationwide, for example, owns the non-standard insurers Titan and Victoria. American Family Insurance has The General. (To learn more about this market, check out NerdWallet’s choices for the “Best Car Insurance for High-Risk Drivers.”)
Drivers who aren’t eligible for a standard policy or a nonstandard plan can apply for their state’s “last-resort” insurance plan. An industry group called AIPSO provides a state-by-state list of these plans.
Good news! Your record will eventually be clean of tickets, accidents, and even DUIs. You might be eligible again for standard insurance coverage in as little as three years.
Do your best to keep your driving record clean. You might also consider taking a defensive driving class. Munoz states that this will show insurance companies that you are proactive and want to be a safe driver.
Breakup letters are not something that people like to receive. Don’t let the non-renewal or cancellation of your car insurance policy complicate your life. It is illegal to drive without insurance for more than a day. These tips will help you stay safe and on the road.