What to Do When Your Car Insurance Drops You? Cancellations and Non-Renewals

If your car insurance company drops you, find a new policy before your current coverage ends. Driving uninsured risks fines and a suspended license. 

Being dropped means either a cancellation, which ends your policy mid-term, or a nonrenewal, which lets it expire at the end of the term. Your notice states the reason and the exact date your coverage stops.

A cancellation ends your policy before its term is over, while a nonrenewal means your insurance company has declined to continue your coverage once the current term of insurance ends.

Both circumstances leave you without insurance, but they follow different rules.

Once your policy has been in force for more than 60 days, your insurer generally can cancel it only for nonpayment, license suspension, fraud, or serious misrepresentation.¹ However, insurance carriers have much more discretion when it comes to the end of your term.  

Insurance carriers drop customers for a variety of reasons, some having nothing to do with the individual driver.Common reasons for a nonrenewal notice include: 

• Excessive claims history

• Nonpayment of premium

• A DUI conviction or repeated moving violations

• Poor credit (in some states)

• Business strategy - a carrier may choose to stop writing or renewing policies in your area.

Common reasons for a cancellation include: 

• Nonpayment of premiums

• Drivers’ license suspension or revocation

• Fraud or misrepresentation

If you’ve been canceled or non-renewed, don’t delay. Compare quotes from insurance companies side by side on Luva to get covered.

It is sometimes possible to get a canceled policy reinstated. Insurance companies often quickly reinstate policies after you make the required back premium payments. However, they may charge a reinstatement fee.

Policies canceled for fraud or serious moving violations are much less likely to be reinstated.

Reinstatement windows are typically short and vary with your insurance company and state. So  call your carrier or agent as soon as you get the cancellation notice.

Nonrenewals are not reinstated. Instead, you must apply for and purchase an entirely new policy, typically from a different carrier. 

If you get a notice of cancellation or nonrenewal, follow these steps: 

1. Read the notice and find your coverage end date. 

2. Confirm the reason you’re being dropped. The notice must state the reason. If it’s unclear, call your insurer.

3. Ask whether you can cure or fix the problem. For example, you may be able to pay the overdue premium or correct a misstatement on your application. 

4. Stop driving your uninsured vehicle. Driving without insurance can lead to fines, a suspended license, and full financial liability in case of an accident.²

5. Shop other carriers. Compare new quotes with identical coverage limits to see whether a quote is cheaper or just thinner.

6. Reduce your risk profile. Paying down a balance or completing a defensive driving course can lower what the next insurer charges.

In some circumstances, a policy cancellation or nonrenewal may affect your future car insurance rates. For example, if you were dropped because of a DUI conviction or excessive moving violations, your future rates will likely reflect your higher risk category.

In some cases, carriers may require you to pay your entire six-month premium up front, rather than pay in installments.

Even a coverage lapse may cause other carriers to lump you into a higher-risk category, which would increase your premiums. Here’s a look at the average premiums for a driver without a lapse and with one month lapse in coverage:

To prevent this, purchase your new policy before your current coverage expires or is canceled. Luva can help you skip the endless forms and find coverage that fits.

If you get a nonrenewal notice because your insurer decided to stop writing or renewing policies in your state or ZIP code, that would not directly affect your risk profile for other companies when you shop for a new policy. However, other carriers may still charge a higher premium than your prior carrier. 

If standard insurers turn you down, you still have two possible options:

1. Apply to a specialty carrier that focuses on high-risk drivers

2. Join your state’s residual insurance market or assigned risk pool

Specialty carriers

Finding a carrier that takes on higher-risk drivers will typically cost more compared to a standard car insurance policy. And you may have to pay your six-month premium in advance, rather than have the option to pay in installments.

But these specialty carriers may be willing to sell you broader coverage than is available in your state’s assigned high-risk pool.

These carriers each have their own underwriting standards. Some will take on drivers with a recent DUI or DWI conviction or SR-22 requirement, multiple accidents, or excessive moving violations.

Specifics vary widely between insurance companies, so shop around and compare multiple competing offers. 

State residual markets (assigned-risk pools)

For those who cannot obtain a conventional car insurance policy, every state maintains a residual market — a “last-resort” option that guarantees coverage to high-risk drivers that the regular market won't take on.³

Most states run it as an assigned-risk plan. The state assigns the driver to a participating insurer, who must accept the customer. However, some states use other systems to accomplish the same thing. 

You usually enter your state’s residual market through a licensed agent or broker after being denied coverage, and the state assigns you to a carrier that must insure you at your state's minimum limits. 

These policies cost well above standard rates, but they're temporary. After about three years with a clean record, you can typically return to the standard market and qualify for lower rates. 

An SR-22 is a Certificate of Financial Responsibility that your insurer files with the state to verify that you carry at least the minimum required liability coverage. It isn’t insurance itself. But if your coverage lapses, your carrier will notify your state DMV, which may immediately suspend your license. 

States usually require an SR-22 for about two to three years of continuous coverage after a serious offense, such as a DUI or driving uninsured. But a policy lapse can “reset” that clock back to zero, which can be very expensive over time compared to standard car insurance premiums.

To prevent your coverage from lapsing, find new coverage before the end date on your policy cancellation or nonrenewal notice.

Note: Not all insurers will issue SR-22. So if you have an SR-22 requirement, confirm this with your carrier before paying your premium.