There are a number of reasons your insurance company might cancel your car insurance, and what you do next often depends on this reason. In some instances, your carrier will simply decide they are no longer offering the type of policy you have or no longer issuing policies in your state. In this case, getting new insurance is simply a matter of shopping for a new insurer.
If you get dropped because you forgot to pay your premium or paid it late, you might have a chance to fix the situation and get your coverage back. Things get a bit more complicated, however, if your company drops you because of frequent claims or a DUI. In this case, you'll need to find new insurance but may struggle to do so. You'll likely need to talk to high-risk insurers and pay hefty premiums.
Request a Reinstatement
If your car insurance provider canceled your policy because you forgot to pay the bill, getting your insurance back may simply require a phone call. Call your carrier, apologize for the missed payment and ask if they will reinstate your policy. Most companies will do so once you've settled your bill. The company may charge you a late fee or surcharge, but once it's paid you'll get back the same coverage you had before.
If you're a repeat offender who pays late often, your insurer might reinstate your policy but charge you a higher premium going forward. They could also ban you from payment plans and make you pay for your coverage up front six months or a year at a time. Your insurer has the right to drop you and could choose not to reinstate your policy.
If your car insurance company refuses to take you back, you'll have to look elsewhere for coverage. This isn't a problem if your insurer is going out of business, leaving your state or shifting away from car insurance policies. You can simply call a few local insurance agents, get some quotes and choose the coverage that's best for you. If, however, you got dropped due to chronic payment problems, excessive speeding tickets, a DUI conviction or another serious issue, insurers may begin to treat you like Typhoid Mary. A poor driving record and criminal conduct behind the wheel may make standard insurers shy away from you. If that happens, you'll need to get insurance from high-risk carriers.
About one-fifth of all insurance companies are high-risk carriers. These agencies insure the drivers that no one else will, but this coverage comes at a price. Sometimes called nonstandard policies, the premiums you pay for high-risk coverage will likely be 10 to 40 percent higher than what you would normally pay. Your policy may also come with restrictions. For example, high-risk policies often won't cover you in a rental car or if you let someone else borrow your car.
When you're in a hole, the first thing to do is stop digging. You can't stop going to work, buying groceries or picking up your kids at school just because your car insurance coverage ended. It's imperative, however, that you resist the urge to risk driving without insurance. Insurance is legally required in every state but Virginia and New Hampshire. If you get caught driving without it anywhere else, you could face hefty fines, jail time and suspension of your driver's license. In some states the police will impound your car. Things get even uglier if you get into an accident while uninsured. Life will be more complicated until you get insurance again, but don't compound your problems by driving illegally.
- Fix whatever problem got your last insurance canceled. If you forgot to pay, schedule automated payments taken from your bank account. Take a defensive driving course if you got too many tickets.
- Request a copy of your driving record from your state insurance department if you don’t know the contents. You’ll be better prepared to respond to questions about tickets or other reports.
- Don’t drive without automobile insurance. It’s not worth the risk of a fine or possible jail time.
Michelle earned her accounting degree summa cum laude and has extensive experience in business management and accounting. Entrepreneurship is in her blood, and her work focuses on helping small businesses successfully compete in a big market. Michelle also knows the value of a dollar and enjoys helping readers understand how best to maximize their money and enjoy a healthy financial life. Her work appears Chron's small business site. She has also worked on small business blogs for a national insurance chain.