Getting car insurance after a canceled policy is possible, but it can be challenging under certain circumstances. You can usually obtain new coverage after a canceled or non-renewed policy, but you may be charged higher premium prices.
Getting Car Insurance After Cancellation: Is It Possible?
In some instances, your car insurance company may choose to discontinue your coverage. While you can get car insurance after an insurance company cancels or doesn’t renew your policy, it can be significantly more expensive. There are two primary routes an insurance company will take to discontinue your policy: cancellation and non-renewal.
Getting car insurance after a cancellation is necessary if you plan to continue driving.
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It’s possible to get auto insurance after a company cancels your policy, but your premium will likely be higher because you’ll be considered riskier to insure.
You can get auto insurance coverage after the non-renewal of your policy. While there’s a chance of higher premiums after a non-renewed policy, it’s not as high as it is after a cancellation.
After your policy is non-renewed or canceled, make sure you get a new auto insurance plan so you can avoid a lapse in coverage and prevent a rate increase.
Can Car Insurance Companies Drop Your Coverage?
Getting car insurance after a canceled policy isn’t as complicated as it may seem. However, your new policy will likely cost more.
The process you’ll have to go through will depend on what method your previous insurance company used to drop your coverage and what grounds led to that decision. There are two methods your company may choose to drop your coverage — cancellation and non-renewal.
- CancellationPolicy cancellation occurs mid-term, meaning your insurance company chooses to discontinue your coverage before the end of its term. It’s often the case for policyholders who have violations. If your insurer cancels your policy, expect a higher premium on your next insurance plan.
- Non-renewalNon-renewal is a type of policy discontinuation where the insurance company drops coverage at the end of the policy’s term. It may be due to company issues, such as closing business in your state or reducing the number of policies they sell in your area. Compared to cancellation, the consequences of non-renewal are much more forgiving.
The cost of your auto insurance can increase after your insurance company drops your coverage. How much the extra cost will be is based on why your provider discontinued coverage and the method they used to end your insurance policy.
Cancellations vs. Non-Renewals
Cancellations are made mid-term, while non-renewals happen after the expiration of a policy. While cancellations are seen as more serious and almost always lead to increased premiums, non-renewals don’t always result in higher rates.
Common Reasons for Policy Non-Renewal and Cancellation
There are several reasons why insurance providers may choose to cancel or not renew your insurance policy. Depending on the insurer's justification for discontinuing your coverage, it might be more difficult and expensive for you to find insurance in the future.
Common Reasons for Cancellation
Bad driving record.
Having multiple moving violations or at-fault accidents over a certain period can lead to policy cancellation. That’s because you’ll be considered a high-risk driver.
Your auto insurance company may check your driving record with the state’s Department of Motor vehicles or equivalent agency. Once they find out about a license suspension, they will likely cancel your policy. That’s because license or registration suspension often occurs because of major traffic violations like an at-fault accident.
A DUI can cause you to get convicted of a felony. This charge classifies you as a high-risk driver.
Giving false information to your insurance company for a claim will cause insurance cancellation. Additionally, using falsified documents is against the law.
Common Reasons for Non-Renewal
Maintaining auto insurance requires you to pay the premium as stated in the policy’s terms and conditions. If you fail to make the necessary payments, your insurance company can revoke your policy.
Your insurance company may choose not to renew your policy if you file too many claims — this is especially true if they’re at-fault claims.
Discontinuation of a particular plan.
In some cases, an insurance company may decide to no longer offer your particular insurance plan. If that happens, they won’t renew your policy after it expires.
Reduction of insured people in your area.
If your company decides to sell fewer policies or reduce the number of policyholders in your area, they may choose to discontinue your coverage after its term ends.
End of business in your area.
Non-renewal can also happen when your insurance provider stops doing business in your area.
Insurance companies send a cancellation notice to inform the policyholder that they’ll be dropping the coverage. But you can always push back or negotiate. In doing so, you can potentially avoid switching companies and paying higher premiums for coverage.
It’s important to take note of the method your insurance company used to drop your policy. That’s because cancellation and non-renewal have different causes and consequences. Cancellation happens mid-term and is usually seen as more serious, while non-renewal occurs at the end of a policy term.
Can You Get Car Insurance After a Cancellation?
You can usually get car insurance after your policy is canceled. However, if you seek coverage from a new company and don’t contest the cancellation, your new rates are likely to be significantly higher.
There are steps you can take if your insurance company decides to drop your coverage, like challenging the cancellation and seeking help from your state’s insurance department.
What to Do When Your Insurance Drops Your Coverage
- Apply for reinstatement.After getting a cancellation notice, contact your insurance provider. Find out why they decided to drop your policy and clarify any misunderstandings. Ask them if it’s possible to reinstate your insurance policy.
- Reach out to your state insurance department.If you believe that your policy was canceled unfairly, then you can file a complaint to your state’s insurance department. The department may determine if state insurance laws protect you from cancellation because of certain reasons like your age. They may also conduct an investigation to determine if the insurer’s decision was justified.
- Shop for a new policy.If your insurance provider had a legitimate reason to cancel your policy and you failed to get reinstatement, then the best thing to do is buy a new policy. You can start by comparing quotes and features from multiple insurance companies to make sure you find the most affordable policy suitable for your needs. Be sure to purchase coverage as soon as possible to avoid a lapse in coverage.
- Consider a residual market plan.Residual markets serve high-risk drivers looking for coverage but having a hard time getting a policy from the standard market. A residual market is created when several insurance providers pool together to cover high-risk drivers, spreading the risk.
Frequently Asked Questions
Since cancellation and non-renewal both refer to the dropping of coverage, many people may find them confusing. Below are some frequently asked questions to help you better understand these concepts.
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