Yes, Your Car Insurance Company Can Drop Your Coverage

A car is a vital part of the American life. Unless you live in a city with a high Walkability score, you’re most likely going to use a private vehicle to get to work, fetch the kids from school, even to get groceries.

According to a recent American Community Survey, over 90 percent of American households own a car. Indeed, driving is something almost everybody does. But is everybody aware of the responsibilities associated with car ownership?

Your car insurance

Buying a car in the US also means getting a car insurance. But it’s not always ensured that you get to keep the coverage throughout the entire period of ownership.

Under US laws, your auto insurer is legally allowed to drop your insurance coverage within the first 60 days or two months of getting your policy for whatever reason they want. Any time beyond this period and they will have to come up with valid rationales to cancel your coverage.

Common reasons for such misfortune include late payments, falsifying your information, or losing your license. However, these are far from being the only reasons. The following are completely valid cases that can prompt your providers to sever your auto insurance coverage.

Failing to pay your auto insurance premiums

The moment you sign that policy document, you enter a pact with the auto insurance provider that they will provide you the needed protection in exchange for a fee or premium. So if you fail to pay your premium, the insurer also drops the coverage – plain and simple.

While other companies allow their policyholders to reinstate coverage once the failed payment has been settled, not all will do. They are also not legally liable to do so.

Too many violations

Insurance companies are all about risk. Your violation counts are determining factors of your risk as an insurance holder. If you record too many violations within your insurance period, you might not be eligible for renewal and your insurer could most likely opt to end their agreement with you.

Too many accidents

If you get involved in an accident that is determined to be not your fault, there’s little to no chance that your insurer will drop your coverage or increase your premium. If you were at fault and you filed a claim, you will likely see an increase in your rates at the time of renewal.

If you’ve been involved in an accident that is determined to be your fault because you were under the influence of alcohol or drugs, there’s suddenly very little chance that your insurer will renew your policy, if they don’t drop it sooner.

Being dropped from an auto insurance for such reason can also limit your access to other insurance policies in the future, owing to your history as a risky driver.

Misrepresentation

Your insurance provider wants as much accurate information as possible. This allows them to determine your risk as a carrier and helps them provide a policy that is accordant to the risk. If you give false information to your insurer, this is determined as a misrepresentation and is absolutely valid ground for policy cancellation. Even worse – a legal case.

What if my policy gets canceled?

It’s illegal to drive without an insurance in the US. If you’re already in the situation, the best thing you can do is to find another provider as soon as possible – ideally within 20 to 45 days after being dropped which is the given allowance in most states.