There’s not much that prevents an auto insurer from suddenly refusing you the privilege of renewing your insurance. Amazingly it doesn’t always mean you did something wrong or received an obvious strike on your account. While the obvious self-inflicted punishments, such as getting your license revoked, missing payments, or being involved in fraudulent behavior will certainly lead to a drop, there are some lesser-known ways that an insurance provider can deem your account too risky to renew. Keep your eye out for these potential qualifiers for a drop in coverage.
Too many claims
Auto insurers don’t like it when you attempt to take advantage of their services. Even when you’re 100% not at fault for any claims, most companies really don’t like it when you file a lot of claims. Someone who is unlucky and gets rear-ended twice in one year might see an increase in premiums, throw in an instance of vandalism or theft and you’ve got a winning formula for dropped coverage.
If you’ve already filed a claim within the last two years for an accident that was your fault, you should think twice before you report another “at-fault” accident to your insurance company. A good rule of thumb is to consider your deductible and weigh it against the damages of the damaged car. If you have a $800 deductible and it doesn’t seem like the damage will total much more than that, you might be better off in the end to pay for the repairs out of your own pocket. If, on the other hand, the damages will substantially exceed your deductible, this is a good time to take advantage of your insurance.
In fact, this is why it’s often advised to avoid reporting minor “at-fault” accidents even if you haven’t reported any in the past.
Underlying Health Risks
If your auto insurer finds out that you have an underlying health problem that could influence a car accident, they will drop you as soon as possible.
This is probably the most common experience with dropped coverage for those who have a squeaky clean driving history and no other reason to believe they would ever lose coverage. If you move to another state, you might run into the problem of ending up in a state where your insurance company doesn’t operate. You should always contact your insurance company before a state-to-state move and if they won’t be able to cover you in the new state, prepare the switch to a new provider as soon as you can.
Ways to Keep your Coverage?
If you fall into the category of people whose auto insurance gets dropped without warning or clear explanation, you might have a chance to argue your side and try to get the decision reversed. It all depends on whether the cancellation is something simple, like a clerical error, or a judgement call by the company that places an arbitrary limit on the amount of claims in a specific timeframe. To increase your odds of proving your case, make sure you keep any and all driving-related incidences documented with hardcopies, like parking tickets, bills, or claims.
Alternative Insurance Market
You would rather it not come to this, but if you can’t dispute your cancellation then you will be forced to look for what is referred to as ‘nonstandard’ insurance. This market is typically caters to elderly and new drivers, those who don’t have good credit, and people whose driving history just isn’t up-to-par for whatever reason to qualify for the major auto insurers. Since they specialize in high risk drivers, their premiums are also high, but they might be your only option.
*Just remember that high risk drivers aren’t considered high risk forever. That’s why it’s important to keep track of when you will regain your low risk status again. At that point it’s time shop around again for a cheaper rate by comparing quotes.