Car Insurance Cancellations and Non-Renewals

While cancellations and non-renewals have the same outcome (i.e., the end of that insurance policy), there are some key similarities and differences.

Key Similarities

• Cancellation and non-renewal have the same end result, which is that your policy will no longer be effective.
• If a company chooses to either cancel or not renew a policy, it is legally required to inform you within the state-mandated time period (more on this below).
• Both customers and companies can choose to cancel or not renew policies.

Key Differences

• There are different reasons why a company or person would cancel or not renew a policy. A company can cancel a policy midterm if the policyholder hasn’t paid their premium, while it might not renew a policy because it no longer offers that type of coverage.
• Cancellations occur midterm, while non-renewal occurs at the policy’s expiration date.

Cancellation

• Definition: Cancellation is when a company or person cancels their insurance policy before it ends, or midterm.
• Reasons: A company can only cancel a policy that’s been in force for over 60 days if the insured hasn’t paid their premium, has committed fraud or misrepresentation on their application, or has a revoked or suspended driver’s license.

Non-Renewal

• Definition: Non-renewal occurs when either the insured or the company decides not to renew a policy once it reaches its expiration date.
• Reasons: The insured may not renew their policy if they want to switch auto insurance providers and save money, or if their car does not run. The company may not renew a policy if it has dropped coverage or no longer serves an area. Another reason a company may not renew a policy is if the insured had a DUI conviction and requires an SR-22, legal proof of insurance¹.

Insurance companies must notify customers of cancellations and non-renewals within a certain time period, as dictated by the state.

Grace Period for Insurance Lapse: State Laws

See below for how long a company has to notify you before it cancels or doesn’t renew your policy.

If you’re still driving but your car insurance policy has been canceled or not renewed, you’ll need to find a new auto insurance provider. However, if you have an SR-22 or a lapse in coverage, meaning you’re a high-risk driver with poor driving history, finding cheap auto insurance could be more difficult, particularly for the former. Learn how to find cheap auto insurance coverage, whether you have an SR-22 or a suspended license.

If You Have an SR-22

If you got an SR-22 for a DUI, you’ll need the best auto insurance for DUIs. However, not every company accepts SR-22s. Here are some that do:

• Allstate
• Dairyland
• Esurance
• Farmers
• GEICO
• Infinity
• Nationwide
• The General
• Titan
• USAA

Shop around and compare quotes from multiple providers to find the best rates.

What if My Coverage Is Denied?

If your coverage is denied, don’t drive without insurance, as you could face financial and legal penalties in every state except Virginia and New Hampshire, which don’t require auto insurance.  See below for the penalties in your state for driving without insurance.

While car insurance companies can’t cancel your car insurance after the first 60 days except for specific reasons like fraud, you can cancel your car insurance at any time. However, you may face cancellation fees, and you may not be able to get your premiums refunded if you paid in advance.

If you don’t commit fraud, get your license taken away, or stop paying your premiums, your policy should stay active. Even if you want to switch auto insurance, it’s better to have two policies running concurrently than a lapse in coverage, which could lead to higher auto insurance costs in the future.