Can a car insurance company really drop you? | finder.com
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Can a car insurance company drop you?

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Find out when your insurer is allowed to cancel your car insurance

Your car insurance can’t be cancelled by your provider without cause. In most states, companies must give written notice of at least 30 days before canceling a policy. However, your insurer can refuse to renew your policy at the end of your current policy term.

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When is an insurer allowed to drop you?

Insurers can generally refuse a renewal as desired, but can’t simply drop customers that easily. Refusing to renew your policy can be done at the insurer’s sole discretion, in line with any guarantees or policy terms it has written up about renewals. If it has promised “guaranteed renewal,” then there might be some stricter rules around it, but this will generally not be the case. Check your policy disclosure to view the reasons the insurer could cancel the policy and how that would happen.

An insurance policy is a contract, and the insurance company can’t bail out of it unless the contract has been violated. Generally, as long as the premiums are all paid up, a customer has to step pretty far out of line to be dropped by a car insurance provider. But there are two main ways your insurer might be allowed to drop you as a customer.

  • Unpaid premiums. If your premiums go unpaid for a while, an insurer has the right to eventually cancel your policy. The exact lengths of time can be found in your policy.
  • Dishonesty or violation of terms. If you are found to have lied on your application to geta lower premiums, made a false claim, committed insurance fraud, entered into the policy dishonestly (such as with a fake identity) or otherwise gone thoroughly against the terms and spirit of the contract, the insurer may cancel your policy.

How much notice do insurers have to give you?

Car insurers must give you notice if your renewal is being declined or your policy cancelled.

This must be in the form of a written notification, typically at least 30 days ahead of cancellation.

Do insurers have to give a valid reason for cancelling a policy or denying renewal?

Insurers are not generally required to provide this information unprompted, but often will.

If you ask for a reason, insurers are usually required to provide it. Similarly, insurers are typically obligated to provide details of their dispute resolution process if requested.

Need quick coverage after cancellation? Find your new policy online.

Name Product Description Roadside assistance New car protection Available states
Progressive covers anything on wheels! Progressive offers coverage for cars, trucks, motorcycles and snowmobiles. Even Segways are covered.
Included free
Yes, cars under 3 year old & 15,000 miles
All 50 states
Enjoy having your own dedicated agent to help you get the best discounts and coverage.
Included free
Yes, cars under 2 years old
All 50 states
Car insurance through Liberty Mutual will give coverage options for almost any situation.
Optional
Yes, cars under 1 year old & 15,000 miles
All 50 states
Drive less than 30 miles a day? Save on the coverage you need with pay-per-mile insurance from Metromile. Get a low monthly rate then pay just a few cents per mile. Available in AZ, CA, IL, NJ, OR, PA, VA and WA.
Optional
Yes, cars under 1 year old & 15,000 miles
AZ, CA, IL, NJ, OR, PA, VA, WA
Backed by nearly 100 years in the business, Farmers Insurance aims to offer options and support to help you find the coverage you need.
Included free
Yes, cars under 2 years old
All 50 states
Esurance offers a modern online and mobile experience that helps you take your insurance on the go. Available in 42 states.
Included free
Yes, cars under 1 year old & 15,000 miles
All states except AK, DE, HI, MT, NH, VT, WY
Root offers simple, affordable insurance that’s ideal for good drivers. Try the Root app for 2 weeks and see how much you could save. Available in 20 states.
Included free
No
AZ, AR, DE, IL, IN, IA, KY, LA, MD, MI, MS, MT, NM, ND, OH, OK, OR, PA, TX, UT
The General offers affordable coverage for nearly any driver who needs car insurance.
Optional
No
All states except Hawaii, Massachusetts, Michigan and New Jersey
Known for providing insurance to high-risk customers who may have trouble finding coverage elsewhere, SafeAuto offers a lot of different discounts, from those for homeowners to good drivers.
Included free
No
AZ, GA, IL, IN, KS, KY, LA, MS, MO, OH, OK, PA, SC, TN, TX, VA
Discounts, flexible payments and a life coach that guides you to your best rates and coverage with Direct car insurance.
Optional
No
AL, AR, FL, GA, LA, MS, MO, NC, SC, TN, TX, VA
Elephant Insurance offers low-cost auto insurance with big discounts. Breaking from the national herd could save up to 40% off your current car insurance.
Optional
Not specified
IL, IN, MD, TN, TX, VA

Compare up to 4 providers

Why would my policy renewal be declined?

There are many reasons a renewal might be declined. Typically, it’s some variation on you being a statistically riskier driver than you were when you took out the policy.

This will often manifest as higher premiums first, but eventually an insurer might simply consider the risk unreasonable.

A suddenly declined renewal could be any or any combination of risk factors an insurer considers, including:

  • Entering a new age bracket
  • Getting speeding tickets
  • DUI
  • Having too many at-fault accidents
  • Making too many claims
  • Missing too many premium payments
  • Adding modifications that affect car performance, or significantly affect its value

What should I do if my policy is canceled and I don’t have a lot of insurance options?

Drivers who are considered high risk might find it difficult to find insurance or insurance at a reasonable rate. You might be considered high risk if you have multiple accidents, tickets, a DUI or other incidents on your driving record.

If you already have high risk insurance from a provider like The General or Safe Auto and your policy is canceled, you’re not out of options yet. Shop around for other high risk providers who are more willing to accept any driver.

If you still can’t get a quote, you may have options from state-supported insurance pools like WAAIP. Since car insurance is legally required, your state must provide a reasonable option for you, so you can try your luck in the high risk pool. You won’t be refused as a customer since risk is shared among all individuals with these plans.

How to avoid being dropped by an insurer

The best way to avoid having a policy cancelled is to not commit insurance fraud, to be honest on your applications and claims and to keep up with premium payments.

Making sure your renewal is accepted can be more difficult. Where possible, try to:

  • Only making claims when you need to
  • Drive carefully
  • Follow the road rules
  • Drive a sensible car
  • Keep up with premium payments

Find the cheapest rates

Compare the best car insurance companies near you.

Your information is secure.

Bottom line

Your car insurance policy does offer some protection against sudden cancellation by your provider. As long as you avoid dangerous driving and pay your premiums on time, you shouldn’t worry about your car insurance policy being cancelled.

While it can be concerning to think your car insurance policy could be cancelled after one major driving mistake, you’re not without options if it does happen. Compare your options to find the right provider you can trust.

Andrew Munro

Andrew writes for finder.com, comparing products, writing guides and looking for new ways to help people make smart decisions. He's a fan of insurance, business news and cryptocurrency.

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