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“Your policy has been canceled.” Those are words you never want to hear from an insurance company. Finding out that your auto insurer has decided not to renew your car insurance policy is no picnic, either. However, the difference between cancellation and nonrenewal can mean the difference between an inconvenient insurance future and a downright unpleasant one.

Most state insurance laws specifically spell out the circumstances under which an auto insurance company can cancel your policy. These are the most common grounds for cancellation:

  • You or a member of your household lose driving privileges during the policy period because of license suspension, revocation or expiration.
  • You make a late payment on your car insurance premium.
  • You misrepresent material facts about your risk — meaning your driving history, claims history or the number of people who have access to your vehicle.

Auto insurers can cancel your policy at any time if you’ve committed one of these offenses, but they must give you written notice of the cancellation. State laws vary on the number of days notice an insurer must give you before the cancellation takes effect, but expect an insurer to give you between 10 and 30 days notice. In the notice, the insurer must tell you why it has decided to cancel your car insurance policy.

What’s more, an auto insurer has the right to cancel your policy at any time and for any reason during the “binding period” — the time frame after your application in which the insurer determines your risk. The binding period is typically 60 days. When an insurer cancels a policy during the binding period, it usually means that it has found a blemish on either your driving record or credit record that makes you an unacceptable risk.

Cancellation is like a dark cloud

If you’ve been canceled for not paying your premium on time, you might be able to get your insurance reinstated.

After an insurer has canceled your auto insurance policy, you may find it difficult to purchase auto insurance from another company. If you’ve been canceled for not paying your premium on time, you might be able to get your insurance reinstated with the same insurer if you otherwise have a good record. But some insurers may require you to pay the full annual premium upfront if you have a history of missing premium payments. Also, many insurers flee from recently or previously canceled policyholders because cancellation points to a bad risk. In fact, some auto insurers ask prospective policyholders if they’ve been canceled within the last three to five years because they generally don’t want to sell insurance to those people.

If you find that your policy has been canceled and the insurer is not willing to reinstate it, you will need to look elsewhere for coverage, but you’ll be shopping as a “high-risk” customer. There are some auto insurance companies willing to sell policies to high-risk policyholders, but at a higher price.

Nonrenewal less restrictive

When your policy expires, either you or your insurer can decide not to renew your policy.

State laws do not always spell out the circumstances under which an insurer can nonrenew policies.

Nonrenewal simply means your insurer will no longer sell you insurance. That can be because you’ve made too many claims for at-fault accidents, were convicted of driving under the influence or received too many traffic citations during the last three to five years. But nonrenewal isn’t always the result of something you did. Your insurer may have simply decided to stop selling that line of insurance.

An auto insurer normally must give you between 10 and 30 days notice of nonrenewal.

In any case, when an auto insurer decides not to renew your policy, it must send you a notice. State laws vary, but an insurer normally must give you between 10 and 30 days notice of nonrenewal. The notice may contain the reason the insurer decided to drop your policy, but it might not. If the reason for nonrenewal is not included in the notice and you want to know, you’ll have to send a written request to the insurer. If you receive a reason and believe it to be unfair, the Insurance Information Institute recommends that you contact your insurance company’s consumer affairs division or call your state’s department of insurance.

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Michelle Megna


Michelle, the former editorial director, insurance, at QuinStreet, is a writer, editor and expert on car insurance and personal finance. Prior to joining QuinStreet, she reported and edited articles on technology, lifestyle, education and government for magazines, websites and major newspapers, including the New York Daily News.

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