Why do Insurance Companies Cancel Auto Insurance Policies?

Nevada state laws dictate when insurers can cancel auto coverage. If you violate the terms and conditions as stated in the original contract, the insurance company can act within its legal rights to deny coverage at the time of policy renewal or cancel your policy with immediate effect. The reasons for cancellation or non-renewal typically revolve around customers making too many claims, having too many at-fault accidents, bad driving record, delinquent premium payments as well as fraudulent claims.

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With all said and done, auto insurance companies are in the business of making money, and if they have to pay out more often than they are bringing in from your premiums, they will have no option than to cancel your contract.

Non-renewal vs. Cancellation of Auto Insurance

It’s important to note that there is a clear distinction between a canceled insurance policy and a policy non-renewal. A canceled policy leads to termination of your auto insurance coverage even if your policy term isn’t up while a non-renewal means you’ll be dropped by an insurer at the end of your current policy term.

Having your auto insurance policy canceled is not only frustrating, but it can be embarrassing as well. When your insurer cancels your policy, you should receive a notice of the termination. If you have appealed to your auto insurance company and cannot have the policy reinstated, then you should start looking for a new provider before your policy ends. Losing your auto insurance in this manner can make it challenging to find insurance later and may force you to pay more in the long run because it will impact your insurance credit score.

Making Multiple Auto Insurance Claims in a Short Period

Getting into a car accident can be nerve-wracking. Getting into more accidents shortly after can be extremely frightening and could make you worry over several things. One good reason to worry is the effect multiple claims will have on your auto insurance.

Generally, car insurance companies opt to cancel an auto insurance policy if you’ve filed too many claims over a certain period of time. The number of claims that can cost your policy entirely will vary from each insurance company. Some auto insurance companies will drop you if you file more than three claims within a three-year period for which accidents you are liable. Most insurers, however, will opt for non-renewal of your policy or charge a higher premium, rather than suddenly cancel it.

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If you’ve been dropped from your current auto insurance or know your policy won’t be renewed, it’s crucial to start making arrangements for a new policy as soon as you can. Just because you’ve been rejected by one insurance company doesn’t mean that they all will follow the same cue. We can help you compare auto insurance quotes to help you find the best insurance rate after your cancellation/non-renewal.

Talk to one of our knowledgeable auto insurance agents today, and let’s get you started on the search for a great new policy.

Related Articles:

How to Determine How Much Auto Insurance Coverage You Need

How to Cancel Your Auto Insurance Policy Correctly

Why Shopping Around for Auto Insurance Is a Good Thing

Will My Auto Insurance Premium Increase If I File a Claim?

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DISCLAIMER: It is important to note that the information contained herein is made general for the purpose of explanation.  You should consult your policy for exclusions or other language that may alter your policy.

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