Mathew B. Sims is Editor-in-Chief and has authored, edited, and contributed to several books. He has been working in the insurance industry ensuring content is accurate for consumers who are searching for the best policies and rates. He has also been featured on sites like UpJourney.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. He reviews content, ensuring that ex...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Oct 30, 2020

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Things to remember...

  • Auto insurance companies can drop drivers after they file a claim, provided they have a valid reason.
  • The insurance company must provide you with a 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.
  • Learn what to do when your auto insurance drops you, and how to stop it from happening.

If you are planning on filing an auto insurance claim or have filed an auto insurance claim, you’ll likely have questions. The most pressing one might be, “Can your auto insurance drop you after after a claim?”

So, can your auto insurance drop you? When can an auto insurance company drop you after a claim or an accident? How many accidents can you have before your insurance company will drop you? Can your insurance company drop you after an accident? When should you be worried that your insurance company will cancel your policy or hike your rates?

The short answer is that all of this depends on many factors. We’ll cover the answers to these questions and more in this article. While your auto insurance company can cancel your policy after an accident, they are more likely to increase your rates.

Read through our comprehensive guide and we’ll help you determine if you need a new policy and help prepare you in case your auto insurance company does cancel you.

Driving without insurance is illegal but finding auto insurance after being dropped is easy if you shop around. Getting dropped from insurance is stressful, but it might be just what you need to find cheaper coverage.

So your auto insurance dropped you. Just enter your five-digit ZIP code into our FREE quote comparison tool to get auto insurance quotes immediately.

Table of Contents

Reasons Auto Insurance Companies Drop Drivers

If you’re worried about what to do if your auto insurance drops you, you’ve come to the right place. But why would your auto insurance company drop you? Usually, it’s because you filed too many accident claims or breached your contract.

Can a car insurance company drop you after a claim? Yes, especially if you file too many and prove yourself to be a high-risk driver. In some cases, you can be dropped from auto insurance before you even file a claim.

How many accidents can you have before your insurance drops you?

Why is your auto insurance company 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 car 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 a car 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.

Now that you know a few of the reasons why car insurance companies would drop you, your next question is probably about what to do if your insurance drops you. You must find a new insurance provider,

If your auto insurance policy cancels, will your rate go up? Unfortunately, it is likely that your rates will increase.

Take a look at how a single traffic violation increases rates for a hypothetical 45-year-old male driver in the table below.

Auto Insurance Rates Increase by Driving Violation
Driving ViolationAnnual Auto Insurance RatesPercentage of Rates Increase
Clean record$1,857.80N/A
Cell phone/texting$2,108.4013%
Speeding (less than 20 ver)$2,108.4013%
At-fault accident$2,360.4027%
Reckless driving$2,360.8027%
Speeding (more than 20 over)$2,108.4013%
Hit and run$2,360.8027%
DUI/DWI
(12-24 Months)
$2,360.8027%
DUI/DWI
second offense (3-5 years)
No Quote
Offered
No Quote
Offered
DUI/DWI
first offense (3-5 years)
$2,013.008%
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The average rate increase for our hypothetical driver after a single traffic violation is around 19 percent. If your insurance company is dropping you, expect to potentially see an even higher premium.

Is it hard to get insurance after being dropped? Fortunately for you, it doesn’t have to be. Keep reading.

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What happens when an auto insurance company decides to cancel your policy?

My insurance dropped me after a claim. What happens now?

Let’s discuss what happens when an insurance company drops you. If an auto insurance company wants to cancel your insurance policy, they must follow certain steps. Otherwise, you may have a reason to report them to your state’s insurance department.

Your auto insurance company must send you a letter explaining that they have made the decision to cancel your insurance policy, and they must provide one or more reasons. The letter must also state the cancellation date.

Can an insurance company drop you for no reason? If your auto insurance company cancels your policy without notifying you or they do not provide a reason, they could be required by law to reinstate your policy. However, it 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.

In the following video, McLaughlin and Stern Personal Injury Law Department go into more detail about when an auto insurance non-renewal notice is not legally required.

If you cannot get your policy reinstated, you can use a comparison tool to quickly find and purchase a new auto insurance policy and avoid a gap in your auto insurance coverage.

When will auto insurance drop you? Keep reading to learn more.

Avoiding 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. You will want to have a new insurance policy before that date.

The quickest way to obtain a new policy is by using a 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 returns the best results, which will include:

  • The insurance carrier
  • The type of policy
  • The price

You can also read the details of the policy before you make a decision. Once you’ve determined which policy would best meet your needs and your budget, you can purchase it directly online.

What are you waiting for? Enter your ZIP code below and start comparing affordable auto insurance quotes today!

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.

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. Then why would an auto insurance company drop you? Usually, it’s because you’ve become too high risk as a driver.

What to do when your insurance drops you? You should start comparison shopping for new insurance. Enter your ZIP code in our FREE tool to get started.

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My Auto Insurance Dropped Me, What Can I Do?

Here are some important points to remember if your auto insurance company dropped you after a claim or you’re worried that your insurance company will drop you for too many claims.

  • 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.
  • DUIs, traffic violations, and high-risk behavior are common causes.
  • 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 it was 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. Enter your ZIP code in our FREE tool to get started.

Reasons Your Auto Insurance Company Might Drop You

Why might your auto insurance company drop you from your coverage? Here are a few reasons this could happen. Keep in mind that this list is not exhaustive, but these are the most common reasons this might happen.

You failed to pay your premium

Sometimes we get swamped with bills that we can’t pay or 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, the company will drop you from your coverage.

They’re required to warn you about this before they do it.

If you receive an email or letter stating that your coverage is about to be dropped, you can quickly try to get reinstated to avoid having the policy canceled.

You collected too many points on your driving record

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. How will points affect auto insurance rates?

Earning points can cause your premium to rise. Earning too many points can lead to your insurance company dropping you.

You failed to provide adequate information or you provided false information on your 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.

Other Reasons for Auto Insurance Cancellation

Below are some other reasons your auto insurance company might drop your coverage.

It’s important to always drive responsibly so that you can avoid this problem with your auto insurance.

  • Reckless driving
  • DUIs
  • Moving traffic violations

There are other reasons why your insurance company might drop you, but we’ve covered the majority of them. If your auto insurance canceled your policy, a letter will be mailed to you with specific reasons as to why the decision was made.

My car insurance dropped me, how do I find something better? Use our quote box below to easily compare rates from great companies!

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What to Do When Your Auto Insurance Provider Drops Your Coverage

How can an insurance company drop you? Can car insurance drop you without notice? When your auto insurance provider drops your coverage, they’re required to send you an explanation before terminating your coverage.

When does your insurance drop? By law, they’re 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 an 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 from auto insurance doesn’t change the fact that you still need insurance 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.

Know When to File a Claim

Insurance companies do not like it when drivers file frequent car accident claims. 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.

  • You are the only car or person involved and you only damaged your property – You do not have to file a claim if only your property and your vehicle were damaged.
  • The damage is less than your deductible – 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 car was parked when it was damaged – If you weren’t driving your car 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.
  • You were involved in an accident with another vehicle – You are obligated to notify your insurance company and file a claim in this case.

Keep reading as we go over best practices for a canceled policy.

What do I do if my auto insurance company drops me?

My car insurance dropped me, now what? When your insurance company drops you, you have a few options. First, you can appeal the decision to the insurance company and try to rectify the problem that caused them to drop you from your policy.

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 they believe you are honest, they will likely reinstate you.

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.

You can join an indemnity company. 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.

When getting car insurance after cancellation, it’s a good idea to compare rates from different companies. You can do this by entering your ZIP code in our quote box below.

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Indemnity 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 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.

So, 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.

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.

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 car 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.

Understanding the Importance of Auto Insurance Terms

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 car.

You’re Free to Cancel Your Policy Whenever You Want

If you buy a 12-month term to lock in your rates for an entire year, you’re not obligated under any type of law to keep your policy for the entire year. But what happens if you drop your auto insurance? You’ll just follow your company’s cancellation policy.

Perhaps you’re planning to sell your car or move out of state, or you’ve suffered a disability that affects your ability to drive. 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 during the term.

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.

If, however, an insurance company decided to cancel your policy in the middle of the term, it could put you in a bind.

The National Association of Insurance Commissioners reports that 13 percent of drivers on the road are uninsured. The last thing that states want is a higher population of uninsured drivers because companies dropped half of their policies mid-term.

Remember, there are only a few scenarios where insurers are free to terminate coverage.

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When can the insurer drop your policy before your policy expires?

Insurance carriers have some protections under state law, but not as many as consumers do.

Here are the most common reasons that are written into a Consumer Bill of Rights:

  • 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.

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Insurance Companies Have More Freedom to Cancel Your Insurance Right After You Apply

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 a risk based on misinformation. 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.

How will the cancellation be processed?

If your policy is canceled near the beginning of the term, the company will either give you advanced notice or they will rescind the coverage entirely. You are given notice when the decision was made because of your moving violations or some other reason beyond your control.

Most companies are required to give you at least a 30-day written notice in the mail.

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 will be sent back to you as soon as the coverage is rescinded.

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What if the 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 changes during the term, your rates could change dramatically.

Claims and tickets can also make you ineligible for a renewal. If the company decides to drop you, you’ll be sent a non-renewal notice.

According to the Insurance Information Institute, your insurance company must provide you with a notice of nonrenewal. 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.

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.

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.

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.