A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products, including home, life, auto, and commercial, and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, mainly in the insuranc...

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Reviewed by Leslie Kasperowicz
Farmers Insurance CSR 4 Years

UPDATED: Oct 18, 2021

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Here's what you need to know...

  • As a consumer buying car insurance, you have special consumer rights to protect you and ensure that you’re covered
  • Insurance companies can’t cancel your coverage without giving you notice and must have a valid reason to cancel your policy in the middle of a term
  • If you’ve received notice that your policy has been set up for cancellation or non-renewal, call your agent to find out the reason for the cancellation and if you can do anything to stop the action
  • A cancellation can be stopped if it’s been ordered for non-payment. Consumers simply need to pay their premium or set up a payment plan to keep coverage active.
  • If a cancellation can’t be stopped, it’s important to shop around to find coverage from a carrier that’s worthy of your business

Receiving a letter stating that your auto insurance coverage is cancelling can be extremely frustrating. You’ve assumed that you have coverage at least until the expiration date on your declaration’s page only to be told that you don’t. Regardless of how frustrating it can be, you need to take action to be sure that you have active insurance coverage before you get behind the wheel. Start comparing car insurance rates now by using our FREE tool above!

When your insurance policy is set up for cancellation, it’s important that you know your rights as a consumer and the reasons companies can legally terminate your coverage without your permission. It’s also important that you’re familiar with some of the outlets where you can get coverage to stay insured and stay legal.

Read Your Cancellation Notice Thoroughly

You have the right to be notified if an insurer intends on cancelling your coverage. If you’ve just recently received an unexpected notice from your insurer, be sure to read the contents of the notice thoroughly.

Your cancellation notice, no matter what the reason, will explain why the company is no longer going to extend coverage to your household.

All companies are required to give policyholders an explanation when coverage is terminated. The notice will also state the exact date that your coverage will terminate. All cancellations take place at 12:01 am on the date stated on the notice.

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Common Reasons For Policy Terminations Initiated By the Insurer

State law prohibits insurance companies from terminating a policy for just any reason after the policy has been issued. Once the state-allotted 30- or 60-day binding period has passed, you’re protected. There’s still reasons that companies can proceed with terminations while the term is still in effect or when a renewal is being processed. Here are some of the common reasons a car policy that’s been in force for more than 30 or 60 days can be cancelled without your permission:

  • Filing a fraudulent claim or helping someone else file a fraudulent claim
  • Suspension or revocation of your driving privilege or someone in the home’s driving privilege
  • Failure to make premium payments by the due date
  • Material misrepresentation on your application
  • Addition of a vehicle used solely for business
  • Failure to provide information requested by the company
  • Diagnosis of a disability that makes it impossible for you to drive

How much notice will you get if your policy is being cancelled?

Your policy won’t just cancel immediately leaving you uninsured unless the initial payment that you made to bind coverage bounces because this means the contract was null and void from the start.

Car insurance companies must give you notice that your will not protect you as of a certain date.

The actual amount of time that you must be given depends on the state that you live in and the type of termination taking place. Here’s a breakdown of common time frames for each type of cancellation:

  • Rescission: Rescission is an action that’s ordered during the underwriting phase. When a policy is rescinded, the coverage is cancelled back to the effective date and all of your money is returned. Since the cancellation is backdated, you’re not technically given notice. The only time a company can do this is when it’s been discovered that you intentionally committed fraud on your application.
  • Mid-term Cancellation: When policies are setup for a mid-term cancellation for a valid reason, you’ll receive a physical notice in the mail at your mailing address even you’re on a paperless billing cycle. Notifications must be sent at least 10 days in advance before a cancellation for non-payment. The notification period is typically 30 days for any other reason. You should check with your state to see if the time frame differs from the standard.
  • Non-renewal: Companies are free to cancel your policy at renewal for a variety of reasons. If you have several claims or a combination of accidents and tickets, there’s a good chance your policy will be setup for non-renewal. When this happens, insurers will send out a notice 30-45 days before the term ends.

Call Your Insurer to See if You Can Stop the Action

Not all cancellations happen. In some cases, you can call your agent up and find out if there’s something that you can do to keep your policy from cancelling. If you haven’t made a payment, paying your premium can stop the cancellation. If there’s a driver in your home that makes you ineligible for coverage, you may be able to sign a driver exclusion so that you’re an acceptable risk.

Sometimes, a cancellation could be initiated for nothing more than failing to provide an odometer reading or rejection form. Call your insurer first to see if your policy can be saved and then start to shop around.

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Start Comparing Auto Insurance Companies

Insurance companies are in the marketplace to compete for business. Some companies are competing for preferred risk drivers and others are competing for high-risk drivers who have a bumpy past and are more likely to file a claim.

It’s your job to find a reputable company that’s priced right for your type of audience.

Here’s some of the things to consider when you’re comparing insurers:

  • Financial rating of the insurer to ensure they can afford to pay claims
  • The insurer’s licencing status in the state that you live in for consumer protection
  • Complaint index with the NAIC
  • Product offerings with the company so that you can get discounts
  • Contact methods available
  • Customer satisfaction ratings
  • Claims processing ratings

After you have a list of insurers that you’d like to do business with, you should start to compare prices. Since you’re in a rush to find coverage, it’s best to use your time wisely. You can compare pricing with all of the best companies at once by using an online rate comparison tool. After you’ve gotten your instant quotes, start the application process for the policy with the best premiums. Be sure to select the right effective date so that you don’t have any preventable lapses. Enter your zip code in our FREE tool below to start comparing car insurance rates now!