What Happens if Your Car Insurance Is Canceled

Apr 13, 2021 10:12 AM EDT | Staff Reporter

What Happens if Your Car Insurance Is Canceled

(Photo : What Happens if Your Car Insurance Is Canceled )

You have to regularly pay your car insurance since it's an essential bill, like your other routine bills. 

It's crucial to contact your insurance company once you realize you're behind your insurance payments.  

What if you can't afford your car insurance payment or miss the payment? 

The key is communication. As soon as you miss a payment, or you think you can't make your payment, call your insurance company and let them know about your situation.  

If your payment is not due yet, but you already know you won't be able to afford future payments, you might have an option to postpone your payment or extend the due date.  

Talk to the agent, and if you have a credible reason why you can't make the payment, you can be eligible for things like partial payment or additional perks. 

What happens if the insurance gets canceled? 

It's illegal to drive without car insurance, and the longer you go without insurance, the bigger the price will be after you purchase it again.  

But sometimes insurance companies can cancel the policy. Why would they do that? 

Common reasons why an insurer may cancel a policy include: 

  • Non-payment of premiums 

  • A DUI/DWI charge 

  • Frequent insurance claims 

  • Costly payouts 

  • Not providing the correct documentation 

Cancellation Based on Non-payments 

This is one of the most common reasons for policy cancellations. People simply forget to pay due to their busy lifestyle or they just can't afford it. 

The biggest mistake people make is they delay payments or ignore notices. The best thing you can do is contact your agent and discuss what kind of options you have.  

What happens when an insurer usually cancels a policy due to nonpayment? 

Understand that whenever you default on payments, whether you just forgot or the check got lost in the mail, you stand a chance of losing coverage. Besides, you also need to make sure your check doesn't bounce because of non-sufficient funds (NSF). 

While your insurance company likely won't cancel your policy due to an NSF charge, it may add extra processing fees, plus it will cost you in bank fees. 

You can get away with one or maybe two NSF payments. However, if your payment checks repeatedly bounce, you're at risk of losing your policy due to nonpayment. To find out about specific details in this regard, you should consult your policy agreement. 

What do you do after your car insurance gets canceled? 

You have two basic options after your car insurance gets canceled. First is to shop around. If the cancellation wasn't your fault, just shake it off. Shop around, search for the best deals, and gather several quotes for insurance policies from reputable companies.  

If you don't want to do some research, simply ask your insurer to take you back. Write an official letter, and see if your state can help. For example, in Illinois, you can appeal to the state Department of Insurance, which holds hearings for these types of situations. 

Your car insurance provider may also refuse to renew your policy rather than just cancel it. Here are a few reasons that may happen:

  • You were cited for drunk driving or other serious driving violations 

  • You've made too many claims, especially if you caused those accidents 

  • The insurer has discontinued offering that type of coverage 

What happens if your carrier dropped you? 

You can apply for insurance again if your provider drops you. Don't hide anything from your new provider - be honest about why the previous insurer dropped you. 

Misrepresenting yourself on an insurance application can lead to having your policy canceled all over again. 

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