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 and Safeco. He reviews content, ensuring that exis...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Apr 24, 2020

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Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.

Things to Remember...

  • Be sure to read your auto insurance before you sign it
  • You must tell your insurance company if you buy a different vehicle
  • Auto insurance providers assess many different when creating your quote for coverage

The contract binds your insurance company, and, by law, they can only make changes for certain reasons. As the buyer, you have more leeway to make adjustments to the contract.

However, you need to read your contract thoroughly to make sure you understand any clauses the insurer may have included that allow changes under certain situations.

If you signed the contract, then you also agreed to any clauses that give the insurance company more rights to change the policy in the middle of the contract.

Start out with the best car insurance coverage by entering your zip code above to get multiple quotes for FREE!

Premium Changes Controlled by You


As the purchaser of a car insurance policy, you have the ability to change your policy or cancel at any time. Changes can be made that might make

Changes can be made that might make your premium go up or down, according to the National Association of Insurance Commissioners. Some changes you make may be by choice while others are out of necessity.

Some changes you make may be by choice while others are out of necessity.

If you choose to cancel your policy, make sure that you have another car insurance company that will be providing you with insurance.

Auto insurance companies consider a lapse in insurance coverage an indication of risk, and you will not get a discount for having prior car insurance coverage.

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Changes You Must Report

Auto insurance providers assess many different factors when creating your quote for coverage. If any of those features change, you must report them to your car insurance provider in order to have your risk reassessed.

This could cause changes to your premium in the middle of your contract, but the change is not always a negative one!

Another change that you must report is if you get a different vehicle. Your vehicle is not insured until you have an insurance card or printout that states that the particular vehicle is covered.

Your rates might lower if your new vehicle is safer or less expensive to repair.

Even if you add a vehicle to your policy, your rates might not go up that much because you will qualify for a multiple vehicle discount.

Furthermore, you must also add new drivers if they are driving your vehicle with any amount of regularity.

While coverage follows the vehicle in most cases, you could be liable for damages caused by a driver who is not named on your insurance policy.

Changes Made by Choice


Some changes to your premium are optional; you choose to make them. Again, such changes could increase your premium or they can cause your premium to drop.

Adding coverage, such as increasing your mandatory liability amount from your state’s minimums to an adequate amount of coverage will cause an increase in your premium.

You are buying more coverage, but the increase should generally not be too high.

Similarly, if you reduce your coverage, such as dropping optional coverage like collision and comprehensive, you will lower your premiums.

SmartMoney maintains that collision and comprehensive coverage make up 30 percent to 40 percent of your car insurance premium. Yet you should only drop these types of coverage if your vehicle is not worth a lot of money.

Premium Change Controlled by the Insurer

According to experts at the Insurance Information Institute, your car insurance policy can be canceled within 60 days by the auto insurance provider.

Generally, after that time, there are only three reasons that an auto insurer can cancel a policy.

First, they can cancel your policy if you don’t pay your premiums; that’s a no-brainer as it is a breach of the contract.

The insurer agreed to provide coverage and you agreed to pay.

If you don’t pay, then they will cancel your policy. You would be hard pressed to find anyone in the business world who continues to provide a service or a product if you don’t pay for it.

Secondly, a car insurance company can cancel your policy if your license is revoked or suspended.

Usually, your license has been suspended or revoked because you have broken the law by failing to pay tickets or committing some serious violation, such as a DUI.

Under such conditions, you shouldn’t be driving anyway, and the insurer does not want to take a gamble if you have proven to be a bigger risk than you were prior to the infraction.

Lastly, your auto insurance provider can cancel your policy if you commit fraud.

Generally, this is written into the contract as a clause. If you have misrepresented information about your risk or tried to steal from your insurer by filing a fraudulent claim, then they are no longer obligated to do business with you.

In most cases, if your car insurance company cancels your policy in the middle of a contract, then they are obligated to refund you a prorated portion of your premium.

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Examples of Fraud


Most people think that car insurance fraud only refers to hard fraud, such as bogus claims or where groups of people try to cause accidents to file claims against an unwitting victim’s insurance company.

However, the insurance industry and the law take a much harder stance on what is considered fraud, according to the Coalition Against Insurance Fraud.

Even instances of soft fraud can cause your auto insurer to cancel your policy in the middle of a contract.

Examples of such fraud include:

  • Padding repair bills on a claim to cover your deductible
  • Claiming prior damage was part of a new loss on a new claim
  • Claiming a past injury was a result of an auto accident when it was not in order to get medical care
  • Insuring your vehicle in someone else’s name
  • Claiming you reside somewhere that you actually do not in order to take advantage of lower auto insurance rates
  • Claiming you only use your vehicle for personal use when you actually use it for work-related driving
  • Low-balling the number of miles you drive in a day or in a year to get lower rates
  • Claiming your car is parked in a garage or secured area when it is not

Oftentimes, many people feel that such examples of soft fraud are harmless exaggerations that are an acceptable way to save on auto insurance.

Actually, underwriting and claim fraud cost insurers billions every year, and those losses are passed right back to every driver who pays auto insurance premiums.

Furthermore, auto insurance companies can cancel your coverage if they feel that you lied on your application.

They might just adjust your premium, but more than likely, they will not want to do business with a customer who doesn’t tell the truth.

Similarly, if an insurance provider feels that your fraud is serious enough, they can have you prosecuted under your state’s anti-fraud laws. Convictions for fraud can include fines, jail time or both.

When Car Insurers Cannot Change Your Premium

Car insurance companies generally have 60 days, by law, to decide to change your car insurance policy.

After that, they can only make changes if it can be proven that you committed fraud, your license is suspended or revoked, or you stop making payments.

While there are many instances where a car insurance provider would probably love to drop you or raise your rates, they are unable to do so until the policy is renewed.

For instance, your insurance provider cannot make changes to your premium in the middle of the contract if you cause an accident.

Even though your risk is higher after an at-fault accident, the insurance company cannot raise your rates.

Once it is time for your policy to be renewed, your auto insurance provider will more than likely present you with a new rate and a higher premium.

This is true for any other instance, such as a DUI, as long as you don’t commit fraud, don’t lose your license, and continue paying.

You could have multiple accidents, and your insurance premiums will not change for the duration of the agreement.

However, once your policy ends, your insurance provider will likely refuse to renew your contract, and you will have to search for new car insurance.

Click here to start your search for new car insurance here by entering your zip code in the FREE box below!