When can your auto insurance company cancel your policy?
If an insurance company was allowed to cancel your policy for any reason, it would be common for companies to cancel coverage immediately after a claim or moving violation.
Fortunately for you, as a consumer, you have rights that protect you from losing coverage at any time during your term.
The only time a company can cancel a policy without notice is when it is still in the underwriting phase.
The company has between 30 and 60 days to sign your request and decide if they want to take the risk. If they discover something in your log, they may change their mind during this time.
If you lied on the documents or were convicted of fraud, your policy will be rescinded.
Policyholders who are guilty of fraud or material misrepresentation are not protected against cancellations in the medium term. Here are the reasons your policy may be canceled after the 60-day cooling-off period:
- You don’t pay your insurance premiums on time
- material misrepresentation
- A material change in risk is assumed that increases the possibility of a hazard.
- A material breach of the duties written in the contract.
If I cancel my car insurance, will I get a refund?
Do you dream of selling your car and getting an insurance refund? You may be able to get a car insurance refund when your car is sold.
If your fees have been paid for coverage that extends beyond the cancellation date, you’ll get a prorated refund.
What happens if your auto insurance is canceled?
Car insurance canceled? You could pay up to 29 percent more on your next policy if it’s been canceled for 30 days. Compare rates from different companies below.
- Car insurance is required in all but two states: New Hampshire and Virginia.
- If you do not make your premium payments on time or are guilty of lying on your insurance policy, your insurer may terminate your policy.
- Most states have an electronic verification system to verify whether auto insurance policies on registered vehicles are active or not.
- If the insurer cancels your auto insurance, it is the insurer’s responsibility to notify DMV that the coverage is no longer active.
- When the Department of Motor Vehicles is notified of a policy cancellation, you will notice that the registered owner requests proof of new coverage.
- If you have a coverage gap, the Department may suspend your registration and charge you a reinstatement fee.
Car insurance is something you are required to have by law. Not only do you have to purchase a minimum amount of coverage, but you also have to maintain coverage for as long as you own the car.
If you don’t have coverage while the car is registered in your name, you put yourself and others at risk. As you shop for insurance, it’s important to create a policy you can afford.
If you are unable to make your regular payments, allowing your policy to lapse can result in severe penalties and heavy fines. It’s best to know what can happen if your insurance is canceled before you get to this point.