The short answer is yes, your insurance company can cancel your policy at any time. The longer version is that it’s highly unlikely that your insurer will drop you after one claim. Many states have regulations against insurance companies dropping clients with no warning. In Florida, for instance, state law requires an insurance company to provide at least 45 days of notice that a client’s policy will be canceled.
When Does a Car Insurance Company Cancel a Policy?
There are certain instances in which an auto insurer can cancel your insurance policy. In the sections below, we’ll look at the most common reasons providers use to drop a client.
Within the First 60 Days
In most cases, insurance companies can cancel your policy within the first 60 days without providing a specific reason. Some states have exceptions to this rule, however. New York state, as an example, requires insurers to provide a reason for cancellation during the first 60 days.
DUI or DWI Convictions
Many insurance providers will drop a driver that’s been convicted of a driving under the influence (DUI) or driving while intoxicated (DWI) offense. Providers tend to view those with DUIs on their records as higher risk, which can lead to the driver’s policy being canceled. If the insurer decides not to drop a high-risk driver, having a DUI can result in much higher insurance premiums.
Loss of Driving Privileges
If you can’t legally drive any longer, an insurer may cancel your auto insurance policy. This could stem from a suspended driver’s license due to a DUI or other major driving infraction, or from a health issue that affects your ability to drive safely.
The term “insurance fraud” covers a wide range of infractions both large and small, usually referred to as “hard” or “soft” fraud. Instances of hard insurance fraud are large infractions, such as faking an accident to receive a claims payout, filing multiple claims for one accident or falsely claiming a car was stolen. Soft fraud typically refers to lies by omission on insurance applications, lying about the source of a damage or exaggerated damages to gain bigger payouts.
Filing Excessive Claims
If you’re filing a large number of insurance claims during your policy term, especially after a number of at-fault accidents, you may receive a cancellation notice from your provider. Too many claims reads as high-risk behavior, and once an insurer views you as too high a risk to cover, it may decide to drop you as a customer.
Having an excessive claims history could hurt your ability to find cheap car insurance from a new insurer.
Nonpayment or Late Payment of Insurance Premiums
Missing a payment here and there won’t necessarily cause your insurance provider to drop your coverage, but you may be hit with late payment penalties. Most insurance companies offer a grace period of 30 days to remit payment.
If late or missed payments become a pattern, the insurer may cancel your policy, as it can’t be sure you’ll actually pay your premium. Essentially, too many late payments makes you a riskier client to insure.