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Yes, a car insurance company can cancel your policy as long as they are in compliance with your policy terms and your state’s laws. Most states allow insurers to cancel mid-policy for nonpayment, fraud, misrepresentation or a suspended license, as long as they provide notice, usually 7-45 days in advance.
For less serious violations, the insurer will normally choose not to renew your policy rather than canceling it right away. Insurance companies can decline to renew a policy for any reason, like multiple accidents or claims, as long as it is not discriminatory.
8 Reasons an Insurance Company Can Cancel Your Policy
- You stop paying your premium.
- You are diagnosed with a medical condition that affects your driving, such as epilepsy or a heart condition.
- Your license is suspended or revoked.
- You report false information in a claim or when buying the policy.
- You were convicted of a felony or a serious crime involving a motor vehicle in the three years before the policy’s effective date.
- A covered vehicle is not registered or fails an inspection.
- A covered vehicle is used to transport explosive or flammable material.
- A vehicle covered by a personal insurance policy is used for business or ridesharing without a business or ridesharing add-on.
These reasons could apply to any driver listed on the policy. Furthermore, each state has different rules about what exactly qualifies as a valid reason for cancellation. If you believe that your insurer canceled your policy unfairly, you should contact your state’s insurance regulator.
What To Do If You Receive a Car Insurance Cancellation Notice
If you receive notice that your policy will be canceled, it’s important to address the problem immediately. In most states, insurance companies must give you a grace period of 7-10 days before canceling your policy for nonpayment. If you pay your premium during this period, you can avoid a lapse in coverage. Otherwise, you can contact your insurer to discuss financial hardship and possible payment plans.
Depending on the reason your policy is being canceled, you can also try to negotiate with your insurer. For instance, you can agree to exclude a certain driver if their license was suspended or they committed a felony.
Ultimately, if your insurance company is determined to cancel your policy, it’s best to find a new insurer as soon as possible to avoid a lapse in coverage. If necessary, look for nonstandard insurance companies or join your state’s assigned risk pool.
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