Can your auto insurance company drop you after a claim?

Whether you are wondering if you can cancel car insurance or if an insurance company can drop you after an accident, the answer is yes to both. You can cancel car insurance whenever you want, even after an accident. 

You may have to pay a cancellation fee if you cancel before the end of your policy term, however, and you should read up on how to cancel your car insurance to make sure you do it correctly. Your insurance company may also choose to drop you if you cause an accident. Keep reading to learn if you can cancel your insurance after an accident. We will cover everything from common reasons for canceling to when insurance companies may drop you as a customer. 

Can I cancel my car insurance after an accident?

Yes, you can cancel your car insurance after a car accident. However, your company will still handle your claim even if you cancel your car insurance after an accident. Your insurance company won’t deny your claim just because you canceled your car insurance after an accident claim. 

Basically, as long as you had active car insurance coverage on the day of the accident, your claim won’t be denied just because you chose to cancel shortly after. So if you want to switch your auto insurance company after an accident, you won’t need to worry that cancellation will affect your current accident claim. 

Reasons for Canceling Auto Insurance After an Accident 

There are numerous reasons why drivers might choose to cancel their car insurance after an accident. They might be unhappy with the claims process, dissatisfied with customer service, or seeking lower rates elsewhere. Additionally, if their vehicle is totaled in the accident, they may not need insurance until they purchase a new car. My car was totaled; should I cancel my insurance? In some cases, my insurance company dropped me due to these circumstances. With the recent Nationwide Insurance closure, these issues have become even more pertinent.

Canceling Auto Insurance for Poor Customer Service 

One reason drivers may cancel after an accident is because of poor customer service. If they have been unhappy with their insurance company and received poor service during the claim, this will likely cement the decision to leave. 

However, all drivers must carry the minimum car insurance required by their state to drive legally. Even a lapse of insurance for a day or two is illegal. So if you choose to switch your auto insurance company to get better customer service or rates, you must have your new policy start before you cancel your old insurance policy.

Otherwise, any lapses in car insurance will raise your auto insurance rates, making it harder to find an affordable car insurance policy. So if you are looking to switch, don’t rush into sending in your cancellation notice until you have a new car insurance policy lined up and ready to go. 

Canceling Car Insurance Because Your Vehicle was Totaled 

The other reason drivers may cancel their auto insurance policy after an accident is because their car is totaled. Unless they have other vehicles that need to be insured, it makes no sense to keep car insurance until the driver can buy a new car. 

Remember, after your car is totaled, you must maintain active insurance coverage until you transfer the title. This prevents a lapse in coverage. Once you’ve transferred ownership, you can then cancel your auto insurance. This is crucial if you’re looking to lower car insurance rates after an accident or if multiple claims have led to your car insurance company dropping you

Canceling Auto Insurance Because of Increased Rates 

If you cause an accident, you will see an increase in your auto insurance rates. Finding cheap car insurance after an accident is more difficult. Suppose your auto insurance company raises your rates more than the average rate increases of other companies in your area. In that case, you may want to switch to a different company. 

It is a valid reason drivers switch car insurance companies, and we recommend shopping around and getting quotes regularly. Some insurance companies will charge significantly less for drivers with at-fault accidents, making them a better choice after an accident. Look at the table below to see the average rates at different companies for drivers with accidents on their records. 

Full Coverage Auto Insurance Monthly Rates for Clean Record vs. One Accident

Some companies that offer cheap auto insurance are Geico auto insurance and State Farm auto insurance. However, bear in mind that while USAA offers great rates, it is only available for military members and veterans, so most drivers won’t qualify to purchase USAA auto insurance.

Can my insurance company cancel my policy? 

Can insurance companies drop you? Yes, your car insurance can cancel your auto insurance policy. However, a car insurance company can’t just cancel for no reason, and it can’t just cancel without notice. Therefore, car insurance companies need to give you advance notice so you can find another car insurance company to insure you. 

So, when will an insurance company drop you? Insurance companies may drop you for the following reasons: 

• Your driver’s license has either been revoked or suspended. 
• You have become too high a risk to ensure and need high-risk auto insurance to drive. 
• You lied on your insurance application about your address or the number of traffic tickets. 
• You have missed payments on your auto insurance policy. 

When will car insurance drop you? In some states, car insurance companies can cancel within three months of insuring you for even more minor incidents, such as if you get into a minor fender bender. Your insurance company may also choose not to renew your auto insurance policy. 

Insurance companies have the option of non-renewing policies for various reasons, some of which may not be directly related to your actions. For instance, if you’ve recently filed two comprehensive claims due to deer unexpectedly crossing your path, even though these incidents were beyond your control, insurers might perceive you as a higher risk because you often drive in areas prone to wildlife encounters. This situation underscores why insurance companies can decide to drop coverage, including cases where auto insurance is terminated after a claim, or in instances. 

How can I avoid being dropped by my insurance company? 

While sometimes being dropped by your car insurance company is outside of your control, there are some things you can do to lessen your chances of getting dropped:

• Be honest with your insurance company about your driving record and other information. Insurance companies can drop you for misrepresenting yourself on an application, which is a form of fraud. 
• Keep a clean driving record and drive carefully. Driving safely and having a clean driving record will help ensure the insurance company doesn’t drop you. 
• Make your auto insurance payments on time or use automatic payments. If you aren’t confident in remembering to pay on time, set up an automatic payment method to eliminate the risk of late payments. 
• Only file necessary claims. If the damage is minor and costs slightly more than your deductible, it is not worth filing a claim if you can afford to pay for the repairs out of pocket. 

If you miss a payment or can’t afford to pay a payment right away, reach out to your insurance company immediately. There is usually a short grace period after a missed payment before your insurance company cancels your insurance policy. Your company may also be able to set up a temporary payment plan to help you afford your car insurance. 

However, suppose you don’t contact your insurance company about making payments. In that case, it can cancel your auto insurance policy, and you will be stranded without insurance until you can find a new insurance company. And since driving without insurance is illegal, you will face higher insurance rates once you sign up with a new company after a lapse. 

The Final Word: Can I drop insurance after an accident? 

Yes, you can drop insurance after an accident. However, it is important to have a new insurance policy that will start before your cancellation goes into effect, or you risk driving illegally without insurance. Also, remember that insurance companies may choose to drop you as a customer after an accident. 

If you’re seeking a new auto insurance provider with more competitive rates following an accident, your best approach is to compare options by requesting quotes. Utilize our complimentary quote comparison tool to explore the best auto insurance rates available from companies in your region, including those unaffected by developments like American Family Insurance closure or changes at American Modern Insurance.