What to Do if Your Car Insurance Is Canceled - Experian (2024)

Reasons Why Your Car Insurance Can Be Canceled

Typically, insurance companies may cancel your auto insurance if:

• You didn't pay your premiums.
• You filed a fraudulent insurance claim.
• Your driver's license was revoked or suspended.
• You lied on your auto insurance application or left out important information that could have prevented the company from insuring you.
• You've been diagnosed with a health problem that could make driving unsafe, such as a seizure disorder.
• You've had your policy for 60 days or less. During this time, insurers can cancel your insurance for any reason.

Different states may have different laws restricting when insurance companies can cancel your car insurance.

What to Do if Your Car Insurance Is Canceled

Before it cancels your policy, your insurance company must notify you in writing and tell you the date your coverage will officially be canceled. Once you receive this notice, here's what to do.

1. Contact Your Insurer to Reinstate Your Policy

If your car insurance was canceled because you didn't pay your premiums, you may be able to reinstate it. Many insurance companies offer a grace period after you've failed to make a payment. During the grace period, your car insurance can be reinstated once you pay the missed premiums and any fines, interest or fees.

Whether reinstatement is possible depends on the terms of your policy and state laws, so check with your insurance company for details.

Reinstating your policy during the grace period prevents you from having a gap in coverage. Being without auto insurance (known as having a lapse in coverage) can mean higher car insurance premiums in the future. A lapse in coverage could even make it difficult to get car insurance at all.

2. Look for New Insurance

If getting your car insurance reinstated isn't an option, you'll need to look for new insurance. Do this right away, before your policy's official cancellation date. Even though your current insurer canceled your policy, you may be able to find car insurance from another company that has different standards for issuing coverage.

Get quotes from several insurance companies, making sure to compare the same type and amount of coverage. If you're still having trouble finding a policy, look for an insurance company that sells "non-standard" car insurance for high-risk drivers. You may be considered high-risk if you have a record of unsafe driving, such as DUIs/DWIs or lots of accidents. Your state's department of insurance or an independent insurance agent should be able to refer you to companies that sell non-standard car insurance.

3. Join Your State's Assigned-Risk Pool

When you can't find car insurance elsewhere, you can turn to your state's assigned-risk pool as a last resort. States create assigned-risk pools to ensure that even risky drivers have the minimum insurance the state requires to legally drive. Insurance companies agree to provide car insurance to drivers in the assigned-risk pool regardless of how risky they are.

Expect to pay much more for assigned-risk pool insurance than you would for standard car insurance. Contact your state insurance department to find out more about the assigned-risk pool.

Can You Drive Without Car Insurance?

Driving without car insurance is a bad idea for the following reasons:

• You could be forced to pay out of pocket. If you're involved in an accident while driving without insurance, you could be legally liable for expenses related to damage to vehicles or property or medical and other costs to people who are injured.
• You could face court costs if you're sued. In the worst-case scenario, a lawsuit could leave you on the hook for millions of dollars, and your assets, including your retirement accounts, could be garnished to pay the settlement.

How to Lower Your Car Insurance Costs

Finding insurance after your auto policy has been canceled can be expensive, but there are things you can do to lower the cost of car insurance.

• Raise your deductible. Typically, a higher deductible means lower insurance premiums. Just be sure to keep your deductible low enough that you can pay it if you have a claim. You may want to increase your emergency fund to do this.
• Drive less. Driving less than 10,000 miles a year may qualify you for low-mileage car insurance, which can save you money. Driving less could also reduce your odds of getting a moving violation or being involved in an accident, which could negatively affect your driving record and your insurance premiums.
• Take a defensive driving course. Insurance companies often offer discounts if you complete a safe driving course.
• Downgrade your insurance coverage. Reducing your coverage limits can lower your premiums, but also leaves you financially vulnerable if you're involved in an accident or have a large claim. Weigh the pros and cons to make sure you're comfortable with this decision. You can also save by eliminating extras such as rental car coverage or roadside assistance.
• Shop around. Compare rates from several car insurance companies to look for the lowest price. Be sure you're comparing the same type and amount of coverage.
• Improve your credit. In many states, insurance companies can review credit-based insurance scores to predict how likely you are to file a claim and adjust your premium costs. These scores differ from general credit scores, but are based on similar data from your credit report. A higher score can mean paying less for car insurance. While you can't easily check your credit-based insurance scores, you can check your credit score for free to see if your credit is in need of improvement.

Learn more >> What Affects Your Credit Scores?

Frequently Asked Questions

• • Cancellation occurs when the insurance company cancels the policy before the end of your term.
  • Nonrenewal means your insurance company doesn't renew your policy when the term is up. Generally, the insurance company has to notify you in advance if they're not renewing your policy and tell you why.

  The reasons for nonrenewal may be similar to those for cancellation. Your insurance company may not renew your policy if they believe you've become a higher risk, for instance. However, sometimes nonrenewal has nothing to do with you. For example, your insurance company may stop selling policies in your state or stop offering car insurance altogether.

• Canceled car insurance can stay on your driving record for three to five years. While the cancellation remains on your record, car insurance companies may regard you as a high-risk driver. To make up for their increased risk, they may charge you more for car insurance during this time.

• If your car insurance was canceled because you didn't pay your premiums, you typically need to sign a no-loss statement to get it reinstated. Also called a statement of no loss, this document attests that you had no accidents or losses while you were uninsured. By giving the signed no-loss statement to your insurance company and requesting reinstatement of your policy, you promise not to file any claims for losses that occurred when you weren't insured.

The Bottom Line

Having your car insurance canceled can be upsetting, but there's no need to panic. Depending on the reason your insurance was canceled, reinstating your policy with your current insurance provider could be fairly simple.

If your insurance company won't reinstate your policy, there are other ways to get coverage. Using an auto insurance comparison tool is a convenient way to explore your options. You can get quotes from multiple insurance providers all in one place, so it's easier to find the coverage you need for peace of mind.