Out of nowhere – or perhaps not – your auto insurance provider decided to drop your coverage. You are probably feeling some frustration and confusion. You might have some questions and want answers. At the same time, you need auto insurance in order to drive. Now you have to shop around and find a brand new policy. What do you need to do after your auto insurance provider drops you?
First, find out why you were dropped
When your auto insurance provider notifies you that they are dropping coverage, they generally provide a reason. If not, then you should reach out to your provider and ask them about it. They should have no problem giving you an answer. And, although it will not fix your situation, knowing the reason can help you when purchasing a new auto insurance policy.
Your auto insurance provider has a legal right to drop you if you break the terms & conditions of your policy agreement. The exact conditions vary for each provider and don’t automatically trigger a canceled policy. However, the decision remains with your insurance provider. When signing up for a new auto insurance policy, make sure you are aware of their specific terms & conditions.
Here are some of the most common reasons auto insurance providers drop coverage:
- Missed payments: If you have missed multiple payments, or you are often late, insurance providers might decide that you are no longer worth the risk.
- Fraud: If an insurance provider finds out that you lied on your insurance application to receive a cheaper rate, they might drop coverage immediately.
- Major violation: If you commit a major violation while driving, or commit multiple small violations, your provider might drop coverage. You may become too risky for them. Or, if you commit a non-auto related crime and end up in jail or getting your license revoked, providers might drop coverage.
- Health issues: Health issues that impair driving might raise a red flag for providers, especially if you tried to hide it from them.
Second, find out how you were dropped
Auto insurance providers can drop your coverage in two different ways: non-renewal or canceled coverage.
Non-renewal occurs when a provider decides they no longer want to provide coverage once your term ends (typically every 6 months). They may make this decision for any number of reasons, but they will likely give you a heads up prior to the end of your term.
Canceled coverage, on the other hand, drops coverage more immediately. Whereas you might have a month or more to compare auto insurance quotes under non-renewal, with cancellation you will only have a week or so. Most states have laws that require providers to deliver specific notice with 10-20 days warning.
Third, find a new auto insurance policy
Your next step is to compare auto insurance quotes and find a policy that fits your needs and budget. Considering your previous provider decided to drop coverage, it is probably smart to avoid applying with them again. However, in the case of a non-renewal, the insurance provider may offer you a different policy at a higher rate. You may have simply become a riskier driver.
Still, it is important to shop around a bit and see what options are available. Because your policy was canceled, you will likely be labeled as a riskier driver. You may no longer qualify for preferred or standard auto insurance rates. Instead, you will have to shop around for non-standard auto insurance. Not every provider will offer coverage for risky drivers, and those who do, will undoubtedly charge a higher rate.
Don’t let your coverage lapse
Make sure your new coverage begins on or before the day your previous coverage will end. The important thing to note when shopping for a new auto policy are the dates. If you only have a 10 days notice, make sure you get started on the searching process right away. Lapsed coverage means you will be driving uninsured for a while. This is risky and not a good look when applying for future coverage.
Can I fight my cancellation?
In most cases, you can contact your agent or insurance company and ask for clarification. If you think you were wrongly dropped, make sure to provide details. If things go well, you might get your problem fixed. Otherwise you will have to start searching for new coverage.
If you feel that your policy is being handled improperly or unfairly, you can also file a complaint with your state’s insurance department. They may be able to provide further relief.