Don’t Let Your Auto Insurance Get Cancelled Due to Non-pay. Here’s Why!

Jan 30, 2021 | Personal Insurance

It isn’t uncommon that you forget to pay your bills or you did not pay them for whatever reason you have. Sometimes, you might have no money, or you could have forgotten it because you are busy. Other bills might not have the same consequences if you forgot to pay for them as compared to your auto insurance.

Cancelled Due To Nonpayment

Insurance companies have the right to cancel your services if you don’t meet their terms and conditions, and that includes paying on time. Although some companies have grace periods, paying late or not at all consecutively gives you a bad record, and they may still cancel you. 

We are independent insurance agents here in Denver, Colorado who want to impart the importance of insurance in our lives. This topic is highly relevant in continuing the services of your insurer to maintain your coverage. Let’s take a look at the reasons why you must pay your premiums religiously.

Auto Insurance Cancelation And Nonrenewal Are Different

For some reason, you might want to call off your car insurance. It may be because you are moving to a different state, or you have sold the car that you insured. Whatever reason you have, there is a proper way to stop your premium. Many people think that by not paying insurance anymore, their policy gets canceled. Yes, it will be, but definitely not without consequences. These not only include your car, they will also affect your next application for insurance. 

However, there is another scenario where your insurer cancels or refuses your insurance to be renewed. Insurance companies can not cancel your policy abruptly if it has been moving for more than a couple of months. There are provisions though as to how calling off and nonrenewal of your policy proceeds. Below are the reasons why.

Auto Insurance Cancellation

Insurance companies cancel your policy if the situation meets certain conditions. Here are the reasons why your insurance company might cancel your policy. 

  • Non-payment of Premiums

Before canceling, your insurer will notify you or would attempt to call you a lot of times to remind you of your obligation. Non-payment can be an issue later. If you get your policy canceled due to non-payment, it may be more difficult for you to afford your next premium. That’s because rates go higher if you make lapses in settling your account.

  • Committing violations

Insurers can call off your policy if you made several violations. Some of these violations are getting tickets, accident records, and having a revoked license. Your policy would likely be canceled if you are verified as a dangerous driver.

  • Misrepresentation or fraud

Another one is by committing fraud or giving false information on your application. A good example is when you lied saying you did not engage in any violation before your insurance application.  The fact is, you were, but you did not admit it.  Fraud may face fines and lawsuits in no time. 

  • Health issues

Your inability to drive safely because of your health condition might mean cancellation from your insurer. It is important to be upfront and honest and tell them if you have issues with your health. They may require you to get a doctor’s certificate stating that you can drive safely.

  • Multiple claims

Filing numerous claims represents how risky you are as a driver. Typically, cancellation of your policy won’t be the case. Instead, they might tell you that they will no longer renew your contract.

Non-renewal

As the word says, non-renewal of auto insurance means stopping the policy after the term. Both the company and the client hold the right to not renew. The good thing is that it doesn’t mean that you’ll get higher premiums the next time you apply for a new one. The company may refuse your request for renewal. It may be either due to a change of terms and offers, or your personal actions. These are some of them:

  • The policy is no longer offered

For instance, if the company decides to stop offering the policy that you have had, they will cease your insurance. 

  • Bad driving record

They may opt for non-renewal if you have done something that raises the company’s risk like driving drunk. The records showing you are a risky driver implies more claims for the accidents you might encounter on the road.

  • Fraud and numerous claims

The same with the cancellation process, fraud, or false information was given will lead to non-renewal. Too many at-fault claims will likely result in a refusal to renew your insurance from your insurer.  

  • Moving out of state

Insurance policies only apply to where you live at the moment. If you will move out of state, your insurer will be notified or you may notify them ahead of time. Ensure that before you move out you have already shopped for insurance in your new residence.

If Your Insurance Gets Canceled for Non-Payment, What Happens?

Getting it canceled is one thing, suffering from the consequences is another. It isn’t just about getting the services ceased, you might also have difficulties in applying for new policies at a later date. That would mean a lot of trouble coming your way!

Having said that, the cancellation of your insurance may concern your car and your life. This results in your credit score dropping, your premiums rising, and obviously, your car is no longer insured. There is also the possibility of losing your license and getting your car repossessed.

You Are No Longer Insured

For instance, you didn’t pay your premium on the day that you are supposed to. The insurance company notified you that you have to pay your balance during the grace period. You didn’t give attention to the notification and brushed it off. Then after the grace period, you accidentally crashed your car on a tree. You are expecting that you still have your insurance. However, your insurance provider unexpectedly told you that your policy is canceled.

Consequences

Getting your insurance canceled means that you are no longer insured. You will shoulder everything that needs to be paid if you get into an accident or if you got your car damaged. Your insurance is absent in helping you financially in reimbursing for the damages. These damages include bodily injuries, property damages, and everything that was covered when you still have insurance.

Legal Penalties

It is illegal to drive around without car insurance in almost every state. The lightest penalty that you can receive is being fined and getting tickets. However, repeated offenses can escalate the results. Aside from legal penalties, if you are involved in an accident uninsured, you’ll be accountable for the medical fees. Worse, you can be sued.

These are possible penalties that you might receive for driving without insurance:

  • Impounding your vehicle

Officers may choose to impound your car and get fined if you are not able to provide proof of car insurance.

  • Liability

If you are involved in an accident, you can be held accountable for the medical bills and damages made to the other party.

  • Suspension of license

Driving around without insurance can make you lose your license aside from getting a ticket. If you made a traffic violation, officers may suspend your license and require proof of insurance from you.

  • Loss of registration

The court may impound your car and revoke your registration.

  • Prison sentence

There’s a great chance of being in jail if you repeat violations. Driving uninsured is one such violation.

Getting the Car Repossessed

Many drivers have cars through auto loans. Some companies require the debtors to have car insurance because they have the right to make sure that their property is secured. It is their investment they are taking care of. If your insurance is canceled, the car may be repossessed.

Some creditors might also impose force-placed insurance upon you. Force-placed insurance may be a lot more expensive. This insurance only protects the lender and not you, but you will be charged for it. 

Your Credit Score Is Affected

Credit scores show how you pay your loans and settle payments. It is related to your payment history. Insurers always consider credit scores because they will be able to know how likely it is that you will pay your premium. They assess if you can pay on time.

Paying late and not paying negatively affects your credit score. Having your policy canceled by not paying has a direct effect on it. Later, it might be difficult for you to apply for insurance policies, credit cards, and loans. 

Higher Insurance Premiums

Some people think that by skipping or delaying their payments, they can save money. However, they did not realize that it is the opposite. With their history of non-payment and their credit score affected, they will be seen as high-risk clients. Likely, they would not settle their account on time. 

If your payment is delayed for only a few days, it is possible to get your policy reinstated. It is certainly a wise choice to call your insurer to clarify things and ask for consideration. However, expect that your rates are high if you have not been paying for weeks or months.

What You Should Do If You Missed Your Payment

Yes, you missed your payment. However, you shouldn’t stop there. What’s been done is done. You should think of solutions to make up for it instead. This way, although the bad record can’t be erased, its impact can be reduced.

If you don’t want your insurance canceled, there are many ways to avoid it. These ways are practical and simple, but they are indeed effective. It can be resolved by cooperating with your insurer. You may also opt for a new insurance company or you can contact us. As Independent Agents, we can shop around for deals that will cater to your needs and budget. You should choose the right payment method suitable for you and your lifestyle. Everything is in your hands.

Negotiate With Your Insurer

Communication is the key. Talking with your insurer will help remove the misunderstandings that you made by not paying on time. Explain the reason why there was a lapse in your payment. Only by clarifying things will you have a chance for negotiation.

You can ask if there are ways to reinstate your insurance policy. Expect that the chances are low and the offers are pricey. If the lapse in your payment is only for a few days, you can also negotiate for a more affordable premium. However, remember that if it has been weeks or months since you last made a payment, your insurance policy might not be restored.

Look For A New Insurance Company

If your insurance can’t be reinstated, you can just look for a new insurance provider. Shop around and compare costs. Try getting covered by companies who offer good services at low prices. Just be ready with the consequences once they see your credit score from your previous insurer. 

This process should be done immediately if you want to hit the road again. In most states, it is illegal to drive without car insurance Also, remember that it may be difficult for you to get premiums at lower prices because of your non-payment history.

Choose the Payment Method That Suits You

Paying your car insurance can be an arduous task. Forgetting to pay for it is not uncommon. There are many ways to pay and settle your account. Insurance companies offer clients various plans to make their payments. As long as you can pay, there are ways to make it. 

  • Annual payment. The most direct way to make a payment is to pay your car insurance annually. This not only saves time and energy but also some money. Some insurance companies offer discounts if you make a full payment annually. This also makes it impossible for you to make a lapse in payment.
  • Electronic funds transfer. Which is one of the easiest ways to make a payment. The insurance companies directly get your payment from your account and card.
  • Monthly payment. Without a doubt, many people opt for monthly payments. It is because most people plan their budget monthly. You can pay by cash, credit card, or electronic check monthly. 

Cancel Your Insurance Properly

If in case you really want to cancel your insurance, there are proper ways to do it. You might opt to cancel especially if you are about to leave your current residence or state. One common mistake that people do is just leave their policies unpaid. Canceling your insurance correctly has its perks. It leaves you a clean record and reduces problems that you may encounter when you apply for insurance again. 

The cancellation date matters. Do not let your insurance remain unsettled for a long time. It is a wise thing to do to cancel your policy on the last day of your premium. Doing this task is a simple matter. You may just need a letter, a simple call, and simply expressing your intention of ceasing the policy. If you want to get covered in another place, make sure that your new policy is in place before canceling the old one.

Ways to cancel your insurance

  • Make a call

Calling your agent is the quickest way to stop your policy. Depending on the insurer, sometimes the cancellation is done after the phone call. However, to make sure that things are straight, request for the documents so that you have proof that your policy is canceled.

  • Mail or fax

If you want to send a message through fax, make sure to include all the details needed and your requested cancellation date.

  • Meet with your agent

The most direct way to call off your insurance is to meet with your agent, sign the papers, and then go home. Your agent might offer you lower rates in an attempt to make your stay, so make sure to think it over.

  • New insurers can do the work

Old policies can also be canceled by your new insurer. All they need are the necessary details such as name, date, policy number, and a cancellation letter with your consent.

Key Takeaways

Being insured is like having someone to back you up. It is like when you encounter a problem, someone would help you solve it. It is an investment, not in business, but in your life. Get insured and you will not worry about the arduous task of paying for the damages and settling papers. Isn’t it what we are always after? We want to keep safe and secured, away from the dangers and headaches of having no backups.

Insurance is all about getting covered. Getting your car insurance canceled just because you did not pay for it is a bad deal. Not only because of the stress in handling documents, but you can also get into many problems as mentioned above. You will also suffer from losing more money. Ensuring insurance payments is a responsibility every policyholder must treat as second nature. 

We Can Help You With That

Let us help you in dealing with your insurance needs and problems. Advantage Insurance Solutions has a great team of reliable and friendly agents you can talk to. Call us now on our New Clients Hotline (855) 973-1202 or (855) 712-6584 and we will assist you through the process of getting the best value for the insurance coverage that fits your needs.