Car insurance companies aren’t allowed to terminate your car insurance coverage whenever they feel like it. Every state has laws regarding when insurance companies can choose to cancel your policy, both during your policy term and at renewal.
States also have laws regarding how much notice insurance companies have to give their customers when terminating their insurance so drivers have enough time to find another policy and avoid a lapse in coverage.
Car insurance cancellation laws by state
The laws about how and when a car insurance company can cancel your insurance policy vary from place to place. The chart below shows the car insurance notice of cancellation laws in every state:
Common reasons your car insurance may be canceled
Typically, car insurance policies last for the full length of the term, whether it’s six or 12 months, and don’t end early unless you cancel the policy yourself. But in some cases, your insurance company may take the step of canceling your policy before the term is up.
There are a number of reasons your insurance company might cancel your policy in the middle of your policy period, including:
Your license was suspended: If you or anyone who is listed as a driver on your insurance policy has your driver’s license suspended, that could be enough for your insurance company to cancel your insurance.
You lied on a claim: If you file a claim (or someone else files a claim against your insurance) and you aren’t honest with the insurance company, they can cancel your insurance coverage for fraud.
You committed a felony: While this one is rare, some felonies that involve driving a vehicle, like DUI/DWI, can be reason enough for an insurance company to cancel your policy.
Your car fails inspection: If your car isn’t able to pass inspection, you are usually sent to get it repaired and come back for a retest once your car is in good working order. However, if your car is in such bad shape it endangers public safety, or you go too long without an inspection, that can be grounds for your insurance company to cancel your policy.
You don’t tell them you are a rideshare driver: Insurance companies offer special rideshare and delivery policies for people who use their cars for work, but if you are in an accident while on the clock and you didn’t tell your insurer what you do for a living, they could potentially cancel your policy.
Can a car insurance company drop your coverage?
Yes, depending on the situation. Car insurance companies can choose to drop your coverage (sometimes referred to as a non-renewal) for three common reasons:
You’re too high risk: If your driving record has gotten worse since you purchased your policy, it is possible your insurance company may choose not to renew your coverage. This usually only happens for very serious offenses, like having multiple DUI/DWI charges, but each insurance company has their own standards for what makes someone too high risk.
Nonpayment: If you don’t pay your premiums, your insurance company can choose to cancel or non-renew your policy. Drivers who have trouble remembering to pay their bill should consider signing up for autopay or paying for the entire policy up front.
Fraud: If the insurance company finds out you misrepresented something when you bought insurance or filed an accident report, they aren’t likely to renew your policy. You may also face serious consequences, like jail time or heavy fines, if they decide to take you to court for insurance fraud.
Can I cancel my car insurance coverage?
Yes, drivers are usually allowed to cancel their car insurance coverage at any time. Depending on the state you live in there may be a cancellation fee or other cost associated with canceling your coverage, but that is pretty rare.
If you prepaid for a full policy term and you cancel your insurance before it’s over, you may receive a refund for the months you didn’t use.
There may also be other consequences for canceling your coverage if you don’t have another policy in place, such as having your registration suspended, though this varies from one state to the next.
Frequently Asked Questions
How long does an insurer have to cancel a policy?
Depending on the state and the reason for canceling the policy, most insurance companies have to provide 30 to 60 days notice before canceling your coverage. Check the laws in your state to find out how much time insurance companies are required to give you before terminating your coverage.
What happens if I just cancel my car insurance?
If you have another car insurance policy in place or you sell your car, you won’t see any negative consequences from canceling your car insurance. You may even get money back! But if you still have a car and you don’t have a new policy lined up, you could have a lapse in coverage or even have your registration suspended, depending on the laws in your state.
Can you cancel a car insurance claim?
Yes, as long as you haven’t cashed a check from your insurance company, you can choose to cancel a claim at any point. But a canceled claim may still impact your insurance rates, especially after an at-fault accident, because the insurance company is now aware you were in an accident and may take that into consideration when setting your rates.
Does canceling insurance affect anything?
Canceling your insurance doesn’t impact anything prior to your cancellation date. This means if you filed a claim or had a claim filed against you while your coverage was active, it will still be paid appropriately even if you cancel your coverage later. However, you won’t have coverage moving forward, which could lead to a lapse in coverage if you don’t have another policy in place.
