What Happens When Your Car Insurer Drops You

When your vehicle-insurance provider cancels your policy, it's important to know why it happened and what you can do next.

Elliot Rieth | 

Oct 17, 2024 | 3 min read

Adobe Stock

While it's possible for your auto insurer to suddenly cancel your policy or elect not to renew your coverage, understanding why you were dropped and what you can do next will help you ensure you don't experience a gap in coverage.

Car-Insurance Cancellation vs. Nonrenewal

The key distinction between these two terms is the immediacy of your insurance provider ending your coverage. If your policy is canceled, it can occur at any point during your policy period. If your insurance company opts for nonrenewal, your policy will finish its current coverage period before being terminated.

Cancellation and nonrenewal also occur for different reasons. For an insurance company to cancel your policy, the justification is typically limited to a small number of issues. Meanwhile, nonrenewal could occur due to circumstances beyond your control.

Why Your Car Insurance May Cancel Your Policy

Your insurance company could decide to cancel your policy for many reasons, including:

• Driving while intoxicated or other serious driving infractions
• Insurance fraud
• A suspended or revoked license
• Failed vehicle inspection
• Unauthorized ride-hailing services

• Too many claims, causing you to become high-risk driver
• Nonpayment or consistently late payments
• Discontinued or reduced coverage in your area

Your insurance company is typically required to give you notice prior to your cancellation. Laws vary from state to state, but notices are typically given 10 to 75 days before coverage will end.

However, some states have unique car insurance-cancellation laws, which could place you at risk of being dropped by surprise. For example, in Texas, if a driver in your household who frequently drives your vehicle has their driver's license revoked, your policy could be subject to cancellation.

How Many Accidents You Can Have Before Your Insurance Drops You

The number of accidents you can be involved in before your insurance drops you will depend on your provider. However, filing more than one accident claim in a three-year period can place you at a higher risk of nonrenewal, even if you weren't at fault for every accident. With each accident claim you file, your insurer may come closer to drawing the conclusion that you are too high a risk to cover.

It's also possible for your insurance company to drop you after a single accident. Although unlikely, insurance companies may choose to cancel coverage if you experience an at-fault accident that results in your license being revoked or suspended.

What to Do When Your Car Insurance Drops You

If you've received notice that your insurance provider is dropping you, you can contact that insurance company to find out if there's a way to resolve the issue. Depending on your circumstances, you may be able to get your policy reinstated. At the very least, you will find out why your policy is being canceled.

If you're unable to reinstate your policy, you should start gathering quotes from other insurance providers to evaluate your options. Once you find a policy that best suits your needs and budget, you will need to apply quickly to ensure your coverage doesn't lapse.

Insurance companies are more likely to accept your application if your policy was simply not renewed rather than actively canceled, as a cancellation can be a sign to other providers that you're a high-risk driver. While you will likely be able to find another insurer, you may have to pay a higher premium than previously.

Cancellations due to a citation for driving under the influence or driving while intoxicated may also require you to file a SR-22 form.

Elliot Rieth

Elliot Rieth is a writer who was born and raised in Michigan, the center of the American automotive industry. With a background in the industry that spans from sales to digital marketing, Elliot has years of experience working directly with dealers and OEMs to create digital content and educate potential customers. When Elliot isn’t writing about horsepower or EVs, he can be found with his two greyhounds enjoying a new book or record.