Car insurance is a legal requirement and will also protect you from complete financial ruin if you’re in an accident. If you keep paying those premiums, you may think that you have nothing to worry about. However, your car insurance provider could drop you for a number of reasons, leaving you in a very precarious and potentially illegal situation.
You Have Made Too Many Claims
After an accident, your insurer will look at your driving record, total claims, and payout amounts to determine how high your premiums will be. If there are too many claims, they may drop you altogether.
At this point, you’ve become too much of a liability. You may have entered into the high-risk category, and if they don’t cover high-risk drivers, they will drop you. In other words, they may simply decide that you’re not worth insuring. After all, their goal is to turn a profit, and if all they’re doing is paying out for claims, that profit gets lowered.
You Were Under the Influence
If you were drunk or under the influence of drugs at the time of the accident, your provider may drop you. It can be very difficult and expensive to get car insurance with a drunk driving conviction—one of the many reasons you should only climb behind the wheel when you’re sober.
You Have Health Issues
It seems unfair, but a car insurance company can drop you if you develop health conditions that affect your ability to drive. The onus is on you to prove that the condition won’t affect your ability to drive, otherwise, you could lose your license as well as your insurance.
This is true for conditions like epilepsy, but generally concerns any condition whereby you lose control of your motor functions. Substance abuse problems and even serious mental health problems also fall under this umbrella.
It’s important to be honest with your insurer. Tell them when you have received a diagnosis and be upfront with your health problems when signing a new policy. Hiding it could only make your situation worse in the future and may prevent a payout when they discover the truth.
Your Car Insurance Provider Goes Out of Business
If your insurer is not active anymore, it can’t offer you a policy. Major insurance companies fail all the time, and this is true for all types of insurance and for companies of all sizes. The responsibility is on you, the policyholder, to make sure you’re joining a company that has a strong credit rating and will remain active for years to come.
Don’t sign a contract with a brand-new and/or financially unstable company just because it offers you a cheap rate. Look for a company that has a strong rating, lots of good reviews, and reputable agents. It always pays to compare and to cast your net as wide as possible, but as far as car insurance is concerned, it’s often best to go with the big nationally recognized names.
Can They Drop Me at Will?
Your car insurance company can’t just drop you because they feel like it. They’re not going through their list of customers and deleting them at random just because they don’t like the way they drive or the fact they have made claims.
Generally, they can legally drop you because of the reasons outlined above, but it depends on the company and your state, as well as several other factors. The most common reason for policies to be canceled is that the policyholder didn’t keep up with their payments.
When you sign a contract with a car insurance company, you agree to pay them money in exchange for coverage. That is the most basic part of the agreement. If you don’t make those payments, you break that part of the agreement, and they can cancel the policy as a result.
A suspended driver’s license is another leading cause of car insurance policies being canceled, followed by a lack of vehicle registration, a fraudulent application, and a fraudulent claim. As for all the other reasons, you can find these in the many terms and conditions of the contract.
If you want to maintain that policy for as long as possible, be 100% honest when you make your application, make all of your payments on time, and stay legal and safe when you’re behind the wheel.
What to Do When a Car Insurance Company Drops You
Being dropped by your car insurance company is a huge blow, one that will give you a massive headache and could hit your wallet hard. However, it’s not the end of the world and there are a few steps you can take to get back on track:
- Speak with your Insurance Company: Maybe there is something you can do to have your policy reinstated, maybe not. You won’t know until you try. Call your insurer, speak with them directly, and see if there is anything that you can do.
- Look at State Law: In some states, you can consult with a specialist state department to act on your behalf and find a solution. If there is anything you can do to change your insurer’s mind, they will help.
- Look Elsewhere: When your insurance company refuses to listen, and you have no recourse for action, it’s time to look elsewhere. Being dropped from an insurance company will place a mark on your record and you will likely pay more in the future, but at least you’ll be legal.
Stay strong and calm, look at your options, and find a resolution. These things happen and while they can be difficult to deal with, it’s not the end of the world!