One of the most frustrating things can be when your insurance company cancels or nonrenewals your policy for what seems like no reason at all. While there are a number of regulations in place with states to avoid random cancellations, there are still a variety of reasons why your insurance company may nonrenew your policy.
What is the difference between a cancellation and nonrenewal?
Nonrenewal: A standard auto insurance policy lasts 6 to 12 months, and at the end of that period, your insurance company can decide whether to renew your policy and coverage or not. They will notify you of nonrenewal if you choose not to renew your policy.
Cancellation: An insurance policy cancellation usually happens during the initial part (first 30 to 60 days) but may still occur during the middle of the policy even though it is scarce. Most insurance policies in the initial phase are usually canceled because the insurance company discovers your application was incorrect or misrepresented.
Even if you have a terrible accident or multiple tickets, your insurance company cannot cancel your auto policy until it comes up for renewal.
Ways to get your car insurance cancelled
- Nonpayment of premium. The most common reason for having your policy canceled is nonpayment of premium. Even then, your insurance company must provide adequate notice to keep your payments up to date before they can cancel the policy.
- You are misrepresenting your application. An insurance company can cancel your policy if they find out the information provided on the application was incorrect or untrue. For example, if they find out you have a teen driver in the home that was not stated on your application, they could cancel your policy.
- Fraudulent activity. If the insurance company finds out that you are behaving fraudulently (e.g., for your car to be stolen or totaled), they cancel your policy and are not obligated to make any claims payments.
Post-cancellation options
Nonpayment of premium. If your policy was canceled for nonpayment of premium, most insurance companies will reinstate it if you bring the premiums up to date.
Note: Most insurance companies will reinstate you back to the date of cancellation; however, some insurance companies will only reinstate your policy on the date payment was made, leaving you with a lapse in insurance coverage. This lapse of coverage can lead to fines and other issues with the DMV. Additionally, they will not pay for any claim during that lapse in coverage.
Having your insurance policy cancelled may make obtaining a new one much harder. In fact, you may have to purchase your insurance from an “assigned-risk” pool, where you are assigned an insurance company at much higher premiums.
Please call our office if you have any questions or concerns about your insurance policy being canceled or nonrenewable.
