Find the Cheapest Auto Insurance Quotes in Your Area
Accidents and the insurance claims that follow can have ramifications for drivers, especially if the collision was the fault of the policyholder. This begs the question: Will my auto insurer drop my policy following a car accident?
The answer is yes, it’s possible, depending on several factors and circumstances - although it is more likely that your policy will be non-renewed. First, however, it is important to understand the difference between “cancellation” and “non-renewal.” We will also talk about the legality of policy cancellation and/or non-renewal, as well as tips on avoiding being dropped by your insurer, towards the end.
Your Car Insurance Can be Canceled If:
Cancellation is the termination of your policy by your insurer before the conclusion of your policy period. According to the Insurance Information Institute, insurers are typically not allowed to cancel a policy that has been in effect for over 60 days, except if you don’t pay the premium, you’ve fraudulently misrepresented yourself on your application, or your driver’s license has been suspended or revoked.
Your Auto Insurance Can be Non-Renewed If:
Non-renewal of your policy, on the other hand, can occur if the insurer chooses to end your coverage once your current policy period expires (although the company usually has to give you advance notice of at least 10 to 30 days prior and explain the reason). Non-renewal can occur for nearly any reason (excluding your gender, race, age, marital status, profession, or physical impediment - these are restricted by law), particularly if you are determined to be a high-risk policyholder due to expensive accidents and excessive moving violations.
Experts say it’s highly unlikely your policy will be canceled following an accident; instead, it’s more likely that you may be:
- Charged a higher premium when it’s time to renew your policy, or
- Non-renewed when your policy term expires.
These two possibilities are more probable if you’ve:
- filed multiple claims in a relatively short amount of time
- been involved in multiple accidents for which you were at fault within a three-year span, or
- committed a serious driving offense such as reckless driving or driving under the influence of alcohol or drugs.
Is It Legal for My Insurer to Cancel or Non-Renew My Policy?
Benjamin Blackmon, a Knoxville, Tenn.-based former personal lines underwriter for a major carrier with extensive experience in underwriting guidelines, says the ability for insurers to cancel or non-renew varies largely by state and filed underwriting guidelines.
“In some states, like Tennessee, you can cancel for any valid underwriting reason not specifically excluded. Therefore, an insurer would be able to cancel you for a single at-fault accident. In other states, like North Carolina, this would not be the case. Instead, the insurer may be able to remove physical damage insurance - such as collision coverage - and leave just liability coverage on the vehicle,” says Blackmon. “However, most standard carriers will not purposely cancel for one accident unless there are other mitigating circumstances.”
If you are involved in an accident for which you are not liable, your insurance company would not typically cancel your policy, says Christopher Paradiso, owner of Paradiso Financial and Insurance Services in Stafford Springs, Conn. “It may only affect your insurance if the party that hits you doesn’t have insurance and you need to put in a claim using your own collision coverage,” Paradiso adds.
So long as the accident occurs prior to the actual cancellation or non-renewal date your insurer indicates, your insurer is obligated to cover the claim based on the limits stipulated in your policy. Nevertheless, note that there are other occasions that could lead to claim denials.
Some Tips on Avoiding Policy Cancellation and/or Non-Renewal
To reduce your risk of being cancelled or non-renewed, follow these common sense tips:
Think carefully before filing a claim. If the accident results in only minor damage, consider paying for the fix with your own funds—especially if the repairs don’t significantly exceed your deductible amount—without involving your insurer.
- Be a focused, attentive driver. “By ensuring that you’re not distracted, you will be more aware of your surroundings and less likely to be involved in an accident,” says Paradiso.
- Pay every premium punctually.
- Provide honest and accurate information to your insurer when applying for or amending your coverage and when filing an accident report/claim.
If your policy is canceled or non-renewed, you can try shopping around for an affordable policy among other carriers.
“There are options out there in every state, including companies that specialize in offering policies to high-risk drivers and which will, consequently, charge higher premiums than normal,” says Bob Passmore, assistance vice president of personal lines for the Property Casualty Insurers Association of America.
Don’t try driving without proper insurance, however. Every state except New Hampshire and Virginia requires drivers to have at least a minimal level of auto liability insurance coverage, with penalties imposed on drivers who don’t.