Can Your Insurance Company Cancel Your Policy Without Notice?
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Having car insurance is a requirement in most states. Having your policy canceled can be more than an inconvenience. If your state DMV finds out you are driving without insurance, you could be fined or lose your license. There are not many ways that your car insurance can be canceled. While the exact rules vary by state, most car insurance companies have to honor your policy through the contract term. However, they may cancel your policy instead of renewing it, or cancel your policy at other times.
An Insurance Policy is a Contract
It is important to understand that an insurance policy is a contract between you and the car insurance company. As such, the only way that your insurance company can cancel your policy is if you breach the contract in some way.
Nonpayment of Premiums
If you do not pay your premiums, this is a breach of contract. You must pay your premiums, usually on time, in order for your policy to continue. If you do not pay your premium for a month, you may be canceled by your car insurance company.
Fraud or Dishonesty
If you commit fraud or you are dishonest in any way about your car insurance, you could have your policy immediately canceled by the car insurance company. Examples include if you lie about your driving record when you first get insurance, or you are dishonest about a claim that you filed against your policy. It is important to always be honest in your dealings with your car insurance company because they can cancel your policy immediately if they discover the dishonesty.
Different states have different rules about how much notice a car insurance company must give to cancel a policy. For cases of fraud or dishonesty, they can typically cancel your policy immediately and without notice. You will receive notice that your policy has been canceled, but you may be driving without insurance unawares.
If you do not pay your premium and your policy is canceled, in most states you will receive a cancellation notice giving you one last opportunity to pay your premium before cancellation takes effect. The notice you receive could be only one or two weeks in this instance. Some states require that they give you 30 days notice.
Instances of Non-Renewal
If you are insured and your policy is on autorenewal, you may have your policy canceled at the end of your term. These cancellations are not a breach of contract because the contract period is ended when the policy ends and comes up for renewal.
Most often car insurance companies will decline to renew your policy if you get too many traffic violations, a DUI, or too many claims within the previous policy period. They may also decline to renew your policy for other reasons such as credit score. You may also have your policy canceled for reasons that the company does not disclose. Insurance companies use many determinations to decide how much risk there is in offering you coverage. If they determine that you are high risk, they can cancel your policy and refuse to renew it.
An insurance company does not have to tell you why they are failing to renew your policy. In most states, they do have to give you notice that your policy will not be renewed. However, these notices are usually sent through the mail and are often missed by policyholders. It may appear to be junk mail, or never arrive at all even though the company claims to have sent it. If you sign up for electronic notifications you may be notified of your policy cancellation in that way as well.
What to Do If Your Policy is Cancelled
If your car insurance policy is canceled with or without notice and you need to get insured right away, you do have options. Even if the major car insurance companies will not insure you because you are high risk, there are insurance companies out there specifically for high-risk drivers. These insurance companies charge more for premiums, but they will give you the coverage you need to legally drive.
If even the high-risk car insurance companies will not insure you or cancel your policy, you may still have options. Because car insurance is a state requirement, they have to make it available to everyone. Some states have high-risk insurance pools for those who cannot qualify for other coverage. Everyone pays more, but it is still usually reasonable because everyone in the pool is sharing the cost of the high-risk coverage.
Stay On Top of Your Policy
It is a good idea to take advantage of the online tools for your car insurance company to keep track of your policy. Staying on top of your premiums and checking your coverage periodically will prevent you from coming up against any surprise cancellations. If you have opted for electronic billing and mail, sometimes you will only get notified of your cancellation by logging into the online tool or mobile app. Doing so periodically will help you ensure that you are not driving without insurance, which can be costly and highly inconvenient.