Can your auto insurance drop you after a claim?
Can your auto insurance drop you after a claim? Yes, if there is a valid reason. Committing insurance fraud, failing to make a payment on time, filing too many claims, and being too high-risk of a driver are reasons you can be dropped. However, your policy cannot be canceled without advanced notice. Don’t risk a gap in your coverage history, find your best company after losing your insurance by using our quote tool below.
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UPDATED: Jul 17, 2021
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- Can your auto insurance drop you after a claim? Yes, companies can drop drivers after they file a claim, provided there is a valid reason.
- The insurance company must provide you with a notification letter prior to the cancellation of your policy.
- The letter must explain the reason for the cancellation and state a policy end date.
- To avoid a gap in your auto insurance coverage, you should use a comparison tool to quickly shop for a new policy.
You’ve filed an auto insurance claim and are waiting for your provider to provide financial assistance. Can your auto insurance drop you after a claim? When should you be worried your insurance company will cancel your policy or hike up your rates?
Can your insurance company drop you after an accident? How until your insurance company drops you? And when will you officially lose coverage?
While your auto insurance company can cancel your policy after an accident, this is rare. You’re far more likely to see your insurance rates increase after filing a claim rather than fully lose coverage.
Learn when and why your insurance company might drop you after an accident or claim. We’ll look at auto insurance laws that determine what rights you have as the customer and what rights your provider has as a company.
Driving without insurance is illegal in almost every state. Where it is not state-mandated, there are specific requirements to remain legally uninsured. If you’re recently been dropped from your insurance provider, you’ll need to find new coverage quickly.
If you’re looking for affordable auto insurance after your company drops you, just enter your ZIP code into our free quote comparison tool above to compare rates from reputable providers near you.
Can an auto insurance company drop you after you file a claim?
Why and when can an auto insurance company drop you after a claim or an accident? Being worried about what to do if your auto insurance drops you is understandable
But understand that being dropped after making a claim is very rare. Also, there are laws in place to help protect both you and the insurance company if this situation arises.
So let’s start with the first question: why would your auto insurance company drop you? Usually, it’s because you filed too many accident claims, committed too many driving infractions within a short period of time, or you somehow breached the terms of your contract.
But can an auto insurance company drop you after a claim? The answer is yes, especially if you’ve filed too many claims close together. This would make you a high-risk driver.
In this situation, it might not make financial sense for your insurance provider to keep doing business with you, so your policy will not be renewed at the end of its term.
In some cases, you can even be dropped from auto insurance before you file a claim. First, let’s determine why your auto insurance company is dropping you?
In general, auto insurance companies can opt to cancel an insurance policy if you’ve committed any of the following infractions:
- You’ve filed too many claims over a certain period of time: Auto insurance companies tend to have a threshold for accidents and other vehicular incidents. If you get into more accidents than your auto insurance company allows, they may determine that you’re not worth the future risk.
- Your auto accident pushed you into the high-risk category: If you’ve gotten numerous speeding tickets or driving infractions over the last couple of years and then you get into an auto accident, you may be deemed a high-risk driver and your insurance company may not be able to write high-risk policies.
- You were impaired at the time of the accident: If you were drinking and driving or under the influence of drugs at the time of the accident, your insurance company may cancel your coverage.
- You filed a claim but did not pay your premium on time. If you do not pay your monthly premium on time or within the month-long grace period, you risk losing coverage because you’ve breached your contract.
If your auto insurance policy cancels for any of the reasons above, or for something not listed, will your rate go up? Unfortunately, it is very likely that your rates will increase, even after moving to a different provider.
Take a look at how a single traffic violation increases annual auto insurance rates for a hypothetical 45-year-old male driver in the table below.
Driving Violation Average Annual Auto Insurance Rates Average Rate Increase Percentages
Clean record $1,857.80 N/A
first offense (3-5 years)
Cell phone/texting $2,108.40 13%
Speeding (less than 20 mph over) $2,108.40 13%
Speeding (more than 20 over) $2,108.40 13%
At-fault accident $2,360.40 27%
Reckless driving $2,360.80 27%
Hit and run $2,360.80 27%
second offense (3-5 years)
The average rate increase for our hypothetical driver after a single traffic violation is around 19 percent. Expect your auto insurance rates after being dropped by your previous company to be potentially even higher.
Exactly how many accidents can you have before your insurance drops you? Usually, the not-so-magic number is three at-fault claims within a three year period.
However, there is no set rule or regulation dictating a specific number. Each insurance company can determine what the at-fault claims limit is before dropping a client’s coverage.
However, some auto insurance policies include an accident forgiveness program, which may help you if you have a rocky driving record. Essentially, your insurance provider will knock off one or two minor traffic violations or accident claims from your record, providing you with a sort of discounted rate.
Some insurance companies include this as an addition to standard policies, while others charge an additional fee. Talk with your auto insurance agent to see if any accident forgiveness options are available to you.
You’re probably now wondering how long those at-fault accidents stay on your driving record. In truth, citations stay on your motor vehicle report or MVR for a few years. Accidents and the ensuing premium increases usually last anywhere from three to five years, depending on the company you use and the state you live in.
Now that you know a few of the reasons why auto insurance companies would drop you, your next question is probably about what to do if your insurance drops you. In short, you must find a new insurance provider.
But is it hard to get insurance after being dropped? Fortunately for you, it doesn’t have to be. Keep reading and we’ll cover why your insurance company might have dropped you, what you should expect from the company moving forward, and what you should do to find new coverage and keep your rates affordable.
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Why would your auto insurance company drop you after you file a claim?
Why might your auto insurance company drop you from your coverage? Insurance carriers have some protections under state law, but not as many as consumers do.
We briefly discussed above the reasons why clients get dropped from insurance after making a claim, but let’s go into more detail.
Here are the most common reasons you might lose auto insurance coverage:
- You fail to make your premium payments by the due date or before the grace period expires.
- You are guilty of lying to get the policy.
- You have been convicted of fraud in the past and didn’t disclose this to the carrier.
- You’ve made a false or fraudulent claim.
- Your license has been suspended or revoked.
- You have a physical or mental condition that affects your ability to operate a motor vehicle.
By knowing when a company may cancel your insurance, you’ll understand how to avoid receiving a cancellation notice in the mail.
Keep in mind that this list is not exhaustive, but these are the most common reasons you might lose insurance coverage after filing a claim. In the next few sections, let’s take a closer look at the reasons why your insurance provider might drop you after filing a claim.
Did you fail to pay your auto insurance premium on time?
Sometimes we get swamped with bills that we can’t pay, or we get behind on other responsibilities. Sometimes it’s just an oversight on our part. Whatever the reason, if you fail to pay your insurance premium on time, the company will drop you from your coverage.
If you paid for the full 6-months of your auto insurance up front, then this will not happen to you. However, it might be the case if you pay your premium in monthly installments.
When you submit your monthly auto insurance payment, you are paying to be protected by your insurer for the next 30 full days, or for the next month. Let’s say one month you pay for insurance and file a claim for a minor at-fault fender bender. The claim is still open as you move into the next month, but you forget to pay your insurance bill.
In this scenario, you will most likely receive an email or a letter stating that your coverage is about to be dropped unless you submit your proper payment before a specific date. That date will also be included in the letter or email.
As long as you submit your payment before the listed date, you will not lose coverage. Otherwise, you’ll have to find a new provider. But what happens to your open claim?
Because you filed the claim during a month that you already paid for coverage, the company will close out and pay your claim like normal. You are just no longer covered for any future damages.
If you filed the claim during the month you did not pay for insurance, your claim could be denied unless you make up for the lost payment.
Did you file too many claims through your auto insurance policy?
Insurance companies do not like it when drivers file frequent auto accident claims. It costs more money, takes up more time, and too many claims become suspicious.
Once again, the magic numb three. If you’ve filed more than three claims within a very short period of time, you start to look risky as a driver to insurance companies.
Knowing when to file can help you avoid being canceled for becoming too high of a risk to insure and getting dropped from auto insurance.
Take a look at a few scenarios below to discover if you should or should not actually file an insurance claim.
- You are the only automobile or person involved in an accident and you only damaged your property: You do not have to file a claim if only your property and your vehicle were damaged, especially if you can afford to make the repairs yourself. If you have collision coverage, a claim can be made, however, it will cause your rates to increase.
- You got into a single-car collision but the damage to your vehicle costs less than your deductible: You do not need to file a claim/ Your insurance company won’t give you any money for the repairs if the damage is less than your deductible, so it’s pointless to file a claim unless it involved someone else’s property.
- Your vehicle was parked when it was damaged: If you weren’t driving your vehicle and lightning struck it or something fell on it or it was hit by another vehicle, go ahead and file a claim. The damage wasn’t your fault. Your rates might increase, but this will not be counted against you on your MVR.
- You were involved in an accident with another vehicle and both vehicles are damaged: You are obligated to notify your insurance company and file a claim in this case.
Any time you file a claim, even if you’re not at fault, your insurance rates can still potentially go up. Really, it’s at the company’s discretion. But that does not mean you’re at risk of being dropped by your provider. It’s just a way for the company to mitigate the extra amount your claims cost.
Any claims you’ve submitted prior to losing coverage will still be fully closed out by your previous insurer.
Did you collect too many points on your driving record?
Sometimes, insurance companies base your insurance premium on the number of points that you accrue on your driving record. These points come from your driving behaviors and include many factors. But how will points affect auto insurance rates?
Earning points on your driving record will almost always cause your premiums to rise. Earning too many points can lead to your insurance company dropping you.
Once again if you commit three at-fault accidents within less than three years, your insurance company may drop you for generating too many points. Let’s say you file your fourth at-fault accident claim of the year. Your insurance company will still close out the claim properly, however, you will not be covered for any future damages.
As previously stated, you will be notified ahead of time by your provider through an email or letter with a termination date included. In this scenario, find new coverage before the date listed in the letter by comparison shopping.
Did you fail to provide adequate information on your auto insurance application?
Providing false information on an insurance application is considered insurance fraud, which is a felony.
You should always be honest when you fill out insurance forms, but you are only held responsible for what you know to be true.
You will not be held liable for statements that you did not understand. But insurance companies can still drop you if the information you provided is incomplete, inaccurate, or false.
Can your auto insurance drop you after a claim has been filed? Yes, an insurance company can drop you at any time.
What are the other reasons why my auto insurance company might drop me?
There are a few other reasons why an auto insurance company might choose to drop your coverage. For example, if you commit a very serious infarction, such as a DUI, then you might be considered too high-risk by your provider.
You can also be essentially dropped by a company before you even fully purchase auto insurance. Basically, insurance companies have more freedom to cancel your insurance right after you apply for coverage. This is because insurance companies can only go by the information that you provide when they give you a premium quote.
If you don’t disclose tickets, accidents, or household members, the insurer might approve you based on misinformation. You could then be denied coverage for committing insurance fraud. Insurance fraud is a felony crime.
All insurance companies have a limited period of time to assess an application and make an underwriting decision. In most states, carriers have between 30 and 60 days to run reports and assess risk. During this underwriting period, the company can drop a policy for any reason.
In some cases, companies simply decide not to take on certain risk classes after a catastrophic loss has occurred. In other cases, it could be driving infractions that make you ineligible for coverage.
Regardless, you should always be honest when you fill out insurance forms. You will be held responsible for what you know to be true. You will not be held liable for statements that you did not understand. But you can still be dropped if the information you provided is incomplete, inaccurate, or false.
To those still screaming, “My auto insurance dropped me; how do I find something better?”, don’t worry, we’ve got your back. Just use one of our quote tools to easily compare rates from great companies near you.
Can I cancel my auto insurance with an open claim?
If you buy a 12-month term to lock in your auto insurance rates for an entire year, you’re not obligated under any type of law to keep your policy for that entire term. What happens if you drop your auto insurance? You’ll just follow your company’s cancellation policy.
Perhaps you’re planning to sell your vehicle or move out of state, or you’ve suffered a disability that affects your ability to drive. Or you might just be looking for cheap auto insurance rates. No matter what the reason, you as the insured are free to submit a request to cancel your policy at any time.
The process for how to drop insurance depends on what company you use. To learn how to drop your auto insurance policy, ask your current agent about the cancellation process.
Just be sure you find new coverage before your current provider terminates your policy, or you risk getting caught driving uninsured. According to the National Association of Insurance Commissioners (NAIC), 13 percent of drivers on the road are uninsured, and penalties for getting caught can be anything from a hefty fine, to losing your license, to facing potential jail time.
If you cancel your policy and it is not close to your renewal period, you may be subject to cancellation fees. If you paid for your policy in full upfront, on the other hand, you might receive a reimbursement check.
You may cancel your insurance policy even if you have an open claim with your insurance provider. Just know that an open claim will stay with your previous insurance company until it is resolved. It will not be passed to your new provider, as that is a form of fraud.
Your previous company will close out the claim as usual because, technically, you were a paying customer at the time the incident happened. Essentially, you’ve already paid the insurance company for this time and assistance.
What happens when an auto insurance company decides to cancel your policy?
Let’s discuss what happens when an insurance company drops you. To start, imagine the following hypothetical situation:
You file a claim for an accident you caused. It’s the third one in a matter of months. On top of that, you also got cited for speeding a few weeks ago. Today, a letter appears in the mail. Your insurance company is going to drop you after you’ve filed a claim. What happens now?
If an auto insurance company wants to cancel your insurance policy, both you and the company have certain rights. Your provider must follow certain steps. Otherwise, you may have a reason to report the company to your state’s insurance department.
First, your auto insurance company must send you a written letter explaining the following:
- The letter must explain to you that the decision has been made to cancel your policy.
- The letter must include one or more reasons for the termination of coverage.
- The letter must also include the specific cancellation date.
Can an insurance company drop you for no reason? Legally, no. If your auto insurance company cancels your policy without notifying you or if it does not provide a reason, the company could be required by law to reinstate your policy.
However, it still depends on why your policy was canceled. If you failed to pay your premium or were convicted of a crime while driving, you may not have any recourse.
If the insurance provider is no longer able to do business in your state, or is downsizing, you also will not be able to reinstate your policy.
If you cannot get your policy reinstated, you can use an online quote comparison tool to quickly find and purchase a new auto insurance policy and avoid a gap in your auto insurance coverage.
Getting new coverage quickly is important. Gaps in your auto insurance coverage can be spotted by providers when calculating your quotes, leading to higher rates. Many providers view periods of non-coverage as an indicator that you might be a higher-risk driver to insure.
If you’ve already been dropped by a company for filing too many claims, also having a gap in coverage might make it impossible for you to attain coverage from a national insurance carrier. We’ll cover this in greater detail later on.
Can I submit an appeal if my auto insurance company drops me after a claim?
When your insurance company drops you, you have a few options. First, you can appeal the decision of your auto insurance company after being dropped and try to rectify the problem.
For example, if the reason was unpaid premiums, you can often repair this situation by simply paying what you owe and/or paying an advance on your next premium.
If your policy was canceled due to inadequate or inaccurate information, simply tell your insurer that you made a mistake and give them the information they need.
As long as the agent believes you are honest, her or she will likely work with you to reinstate you. If not, you’ll have to find new coverage elsewhere.
How will the auto insurance cancellation be processed?
If you are unable to submit an appeal and get it approved, it’s important to know how the insurance cancellation will be processed by your provider. It really depends on how close you are to your policy renewal period.
If your policy is canceled near the beginning of your policy term, the company will either give you advanced notice or it will rescind the coverage entirely.
Rescissions are most common when the company has determined that you lied on your application. A rescission means that you never had coverage because you misrepresented yourself when entering into the contract.
Whatever you’ve paid into the policy up to that point might be sent back to you as soon as the coverage is rescinded.
Otherwise, you will be given notice when the decision was made because of some other reason beyond your control. Most companies are required to give you at least a 30-day written notice in the mail.
What is my auto insurance policy term length?
Most people celebrate their wedding anniversaries, but not many consider their anniversary with their insurance company as very significant.
While you’re not going to jump for joy when you approach another anniversary with your insurer, your policy term does hold some significance when it comes to how your insurance is rated and renewed.
Auto insurance is sold in two different term options: six-month terms and 12-month terms. The term is how long the coverage is provided under the policy at the rate that you were given when the policy was issued.
During this term, your risk class won’t change unless you make changes to the policy by adding a driver, changing your address, or adding a vehicle. This means no rate increases until the six-month period is over.
If you’re not happy with your carrier, you can always shop around and look for cheaper rates. The easiest way to shop around is to use an online rate comparison tool.
What if the auto insurance policy is being dropped at renewal?
When the policy comes up for renewal, the insurance company will underwrite your policy again to see if the carrier wants to keep you as a client. If something changed during the previous term, your rates could change dramatically.
Claims and tickets can also make you ineligible for a renewal. Remember, if the company decides to drop you, you’ll be sent a non-renewal notice.
According to the Insurance Information Institute (III), your insurance company legally must provide you with a notice of nonrenewal. In other words, there is a notice of cancellation requirement. You should always know your rights when you enter into any type of contract.
Never let an insurance company drop your coverage without first giving you a reason. It’s your right to know why you’re being dropped, even if it’s during your policy’s renewal period.
How do you avoid a gap in auto insurance coverage after receiving a cancellation notice?
If your auto insurance company sent you a cancellation notice, look for the cancellation date and take note of it. You will want to have a new insurance policy in place before that date. This is the only way to avoid a gap in your auto insurance coverage.
The quickest way to obtain a new policy is by using an online quote comparison tool. Auto insurance comparison tools take your information and your auto insurance needs and compare them to all the available policies in your local area.
The tool then provides you with the best results, which will include:
- The insurance carrier
- The type of policy
- The quoted price
You can also read the details of the policy before you make a decision. Once you’ve determined which policy will best meet your needs and your budget, you can purchase it directly online.
Just know that if the information you inputted was inaccurate, your quote might change once you purchase the actual insurance coverage. An agent will verify your information and adjust your rates accordingly.
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What is the auto insurance consumer bill of rights?
When you buy auto insurance, you’re entering into a formal contract with an insurance company. In exchange for your premium, the carrier promises that they will pay for covered claims that are presented against your policy.
Can auto insurance drop you without notice? No, remember, we’ve already covered this. Your insurance company must provide you with a reason why your coverage is being terminated, or else you can fight back and get your policy reinstated.
You have the right to exit this contract for any reason, but the insurer doesn’t have the same luxury.
Every state has a department of insurance that drafts a Consumer Bill of Rights. A Consumer Bill of Rights is a summary of your rights under the state law when the company issues you a policy.
In this bill, which every company is required to provide to new policyholders, it says exactly when an insurer has the right to drop a policy. That’s what you need to know so that you can protect yourself if you ever get a notice of cancellation.
Will your insurance company drop you after an accident? If it’s your first offense, you’re probably fine. In fact, insurance companies are literally meant to help you after you’ve been in a traffic accident.
Why would an auto insurance company drop you? Usually, it’s because you’ve become too high of a risk as a driver, or you’ve missed a payment.
The good news is, you already know what to do when your insurance drops you. You should start comparison shopping for new insurance.
What are my indemnity auto insurance company options?
Most major auto insurance providers have an alternate company that they pull funds from to cover high-risk drivers. You may be considered a high risk if you:
- Have been on and off an insurance policy over the past year.
- Have had multiple traffic violations.
- Have been cited with a DUI.
- Have been cited for reckless driving.
- Have been cited with failure to yield type violations.
- Have accidents on your record.
Again, this list is not exhaustive, but it covers many situations where you might be considered high risk. If you fit into any or all of these categories and that’s the reason your previous company dropped you, you could ask if you qualify for the indemnity version.
Keep in mind that these policies tend to have different stipulations or maximum benefits and higher premiums than the basic insurance policies, so read the fine print.
The higher cost is due to the higher risk the insurance company is taking on by insuring you. Therefore, when shopping for auto insurance, compare and check the finer points of the policies as you shop and ask questions to determine what your coverage entails.
With a little time and research effort on your part, you’ll be able to replace your current insurance if your provider is threatening to drop you. However, if the decision to drop you was due to recent traffic accidents, DUIs, or reckless driving, it may be a bit harder to get reinstated.
Some insurance companies simply do not want to deal with a high-risk driver. However, you can ask any provider you talk to about joining their indemnity company.
Make sure that you get another auto insurance policy in place before the previous provider drops you so that there are no gaps in coverage.
Browse the insurance companies and see which ones fit your needs, then contact an agent to learn more about what you can do to protect yourself and your vehicle when your insurance provider gives you a cancellation notice.
Remember, it’s not worth the risk to drive without insurance. Make sure you have the right coverage at the right cost.
My auto insurance dropped me; what else can I do?
“My auto insurance dropped me now what?” Does this sound like you? Let’s recap some of the options we’ve discussed previously in this article to help you untangle yourself from this messy situation.
Here are some important points to remember if your auto insurance company dropped you after a claim. If you’re worried that your insurance company will drop you for too many claims, the same tips apply.
- When you buy auto insurance, you must choose between a six-month and a 12-month term.
- By definition, an insurance term is the period of time when coverage is provided by the insurance policy.
- Whenever you submit an application for coverage, the application will go through an underwriting period.
- During the underwriting period, which can last 30-60 days, the insurer has the right to drop a policy for any reason.
- After a policy is issued and the binding period ends, the insurer is only free to cancel policies before the term is up for non-payment, fraud, license revocation, and material misrepresentation.
What happens if your auto insurance is canceled? You can appeal the decision and try to fix the problem that caused them to drop you from your policy.
Auto insurance companies can drop you for different reasons. DUI convictions, traffic violations, and high-risk behavior are common causes. But failure to pay premiums is also a cause for non-renewal or cancellation.
Can an insurance company drop you during a claim? Yes, they can. Sometimes things are beyond our control. Decisions are made by companies sometimes that affect our lives in a big way, even if we don’t feel they were justified.
You may be hit by a driver. You may have a medical emergency, which causes you to make several late payments. Or you may have a new teenage driver who has a lead foot and several tickets to show for it.
Many of these unexpected scenarios could cause your insurance company to cancel your policy.
Is your auto insurance company dropping your coverage? Don’t wait, start comparison shopping now to make sure you have the right coverage at the right price. You can use one of the quote tools on this page to get started.
What else should I expect if my auto insurance drops me after filing a claim?
We’ve covered a lot of information so far about what to expect if your auto insurance drops you after filing a claim. How can an insurance company drop you? You already know the company will send you a notification letter in the mail.
Can auto insurance drop you without notice? Absolutely not. When your auto insurance provider drops your coverage, the company is required to send you an explanation before terminating your coverage.
When does your insurance drop? By law, the company is required to give you a 30-day notice before ending your policy so that you have a chance to find replacement coverage in time.
It might surprise you to learn that there is no set requirement for how many claims you can file before State Farm, or any auto insurance company, drops you.
Different companies can have different policies. So if you’re wondering how many claims before State Farm drops you, the answer will be different than the answer for Progressive or another company.
Ultimately, how you get dropped doesn’t change the fact that you still need coverage. If your auto insurance company is dropping you, start looking for new coverage immediately. Getting caught driving without insurance will only increase your stress.
If you’re starting over with a new company, it’s relatively easy to implement a new policy right away. Simply compare and shop the various options and contact the provider of your choice to get a free quote.
Now that you’ve finished this guide, there will hopefully be no more frantically exclaiming, “My insurance company is dropping me, now what,” or worrying, “What if my auto insurance dropped me without notice,” or “What if my auto insurance dropped me after a claim?”.
Can homeowners insurance drop you? The answer is yes, in certain circumstances. Failing to pay your bill and committing fraud are just a couple of the things that can cause you to lose homeowners insurance.
Are you ready to buy auto insurance after being dropped by your previous company? Now that you know why an auto insurance company would drop you, enter your ZIP code into our free comparison tool below to find your new auto insurance rates.