Can Your Car Insurance Company Drop or Cancel Your Coverage?
Last Updated on September 16, 2021
We have all been in an accident (or a few) sometime within our lifetime – it happens. People make mistakes, we are accident-prone, and sometimes we make bad judgment calls, which is completely normal because we’re human. At the same time, you may be curious about how many accidents it takes before your car insurance company begins to consider dropping you or canceling your coverage. There has to be a point where your car insurance company says, “alright, this guy is costing us a lot of money.”, right?
In this article, we are going to discuss how exactly you can have your car insurance coverage canceled.
What Is the Likelihood of My Car Insurance Company Canceling Coverage After Multiple Claims?
It actually is highly unlikely for your car insurance company to drop you even after multiple claims. Whether you have received multiple DUIs or have been in multiple at-fault accidents within a short time period, it is still unlikely that your car insurance company will decide to drop you.
It is more likely that your car insurance company will decide to refuse to renew your car insurance coverage and will not cancel it immediately. This means that when it is time for you to renew your coverage (every 6 or 12 months), your car insurance company may simply refuse to insure you, ultimately making you choose another company.
What Are Some Reasons That My Car Insurance Policy May Be Canceled?
As stated previously, canceling your car insurance policy is extremely rare, but there are reasons for the company to choose to cancel your policy. To be clear, cancelation pertains to the termination of your insurance policy before the end of your policy period, NOT when they refuse to renew. Most times, your policy will be canceled within the first 60 days of the policy period.
Here are two reasons that your company may choose to cancel your policy:
- Misrepresentation – By far one of the most common reasons, your car insurance may be canceled due to you lying on your car insurance application. Your car insurance company will not find out what you lied about until they conclude the discovery process. Once the misrepresentation is discovered, then your car insurance policy will be terminated.
- Fraudulent Claim – A fraudulent claim could bring legal repercussions as well as canceling your coverage. An example of this would be if you stated that your car was destroyed, stolen, or had any harm done to it that you partook in or profited from, then your car insurance company could cancel your policy.
As you can see, the main and more likely reasons that your company may cancel your car insurance coverage is due to either lying on an application or committing flat-out insurance fraud. These reasons are much more serious than dropping you over multiple at-fault claims.
What Happens When Failing to Renew My Car Insurance Policy?
Once again, if you have various claims, accidents, or any offenses on your driving record, then your car insurance company may refuse to renew your policy. This is what we call, “non-renewal” and your car insurance company may drop your coverage at the end of your current policy period.
Fortunately, insurance companies are not allowed to drop drivers for various reasons. These reasons may include your race, age, color, gender, marital status, disability, or occupation. If you have serious reason to believe that your insurance company is dropping you or denying you coverage for any of these reasons, then this could be labeled and described as discrimination, which is against the law.
What Amount of Incidents Is “Too Many” and Can Enable My Car Insurance Company to Cancel My Coverage?
The amount of at-fault accidents or incidents vary for each company. While some car insurance companies may refuse to renew coverage after 2-3 DUIs or accidents, there are others that may require much higher numbers before deciding to deny you coverage. There are even some companies that may decide to never deny you coverage, but instead, they will charge higher rates, costing you a large sum of money every money for car insurance. Ultimately, there is not a specific amount of at-fault accidents that will enable your car insurance company to deny you coverage – it really just depends on the company and situation.
Having said that, if you have a past of DUIs and reckless driving, then the chances of the company not renewing increases dramatically. Any violation from multiple speeding tickets, reckless driving violations, DUIs, or any other form of illegal driving will put the company in a position where they label you a high-risk driver and will refuse to renew your current policy.
Now, if you are a driver with only a few incidents that were rather minor, then it is highly unlikely that your car insurance company will cancel or fail to renew your policy. The company will more than likely just raise your rates instead of drop you, which is not ideal but it is better than having absolutely no coverage at all.
Overall, each company varies in terms of how they will handle these situations such as cancellations and non-renewals. There are a few insurance companies out there that actually prefer high-risk drivers because they can choose to pelt them with high premiums. Most insurance companies prefer drivers that are low-risk and are not likely to cause an accident.
Your Car Insurance Company is Not Going to Cancel Your Coverage – So Relax!
It is not in your car insurance company’s interest to cancel or deny you coverage. Car insurance companies want to maintain and continue to bring on new clients. Being known for canceling coverage over fender benders and accidents will only persuade them to stay away. Therefore, if you are not lying on your insurance application or committing insurance fraud, then you should be fine in terms of not having your coverage canceled and may only have them refuse to renew your policy – which still gives you time to find a new car insurance company. Drive Safe!