When Car Insurance Companies Drop Their Customers
Some of you may have read that title and are just now finding out that car insurers can simply stop insuring drivers.
Others of you may already know they can, but still don’t get why any company would tell its paying consumers to get lost.
The truth is car insurers cancel and end policies all the time if they think the client is more trouble than they’re worth.
Two at-fault accidents in three years. That’s when they dump you.
That’s it. Two.
We’re humans and we make mistakes all the time, but if we make more than one mistake that happens to involve a motor vehicle through almost a third of a decade, then not only will we not be forgiven, but any entity with access to our driving records will officially think less of us as people. Even if they’re just fender-benders.
Is that scary to hear? Maybe it should be. Anybody who’s driven more than a mile would probably agree everybody on the road could stand to be a better driver.
The good news is the “two accidents that are your fault in a three-year span” mark is more of a rule of thumb than a law of the universe. High-end insurers typically follow this rule, but sometimes they’re more lenient, and smaller insurance companies might give you more leeway to keep you around. Of course, it’s best not to push your luck.
The fact of the matter is a car insurance company’s business model revolves around selling promises to pay for something that all parties involved hope will never break. So, when that thing does break, they won’t be happy that they have to pony up the money.
If your past gives them any reason to think you’re going to make them have to pay, they’ll tell you they’d rather not have your money in the first place.
What Else Could Go Wrong?
Ready for more bad news? The above paragraph means if you’re in too many accidents and file too many claims in too short of a timeframe, even if none of them are your fault, they may go ahead and drop you, because it’s not financially feasible to insure an unlucky person.
There are other reasons an insurer might stop covering a driver, but if any of these happen, there are probably bigger issues at hand.
If a driver has too many tickets or moving violations, any reckless driving offenses or DUIs/DWIs, or if a driver gets their license suspended for any reason, yeah, they’re out.
Also, if a driver can’t get or renew their license due to medical issues, the insurer will see themselves out, but at that point, car insurance would probably not be the customer’s biggest worry.
The most common reason for insurers to refuse coverage, however, is delinquent payments. Paying bills on time when money is tight is still not something that’s easy for everyone, but at least this reason is perhaps the least surprising.
But How Can They Do That?
Assuming they go about it the proper way, car insurers are absolutely at liberty to tell their customers to vamoose. There are two ways an insurance company can legally drop their clients: with or without warning.
When an insurance company non-renews a policy, they’re trying to be nice. This is when they let the coverage last until the term expires, but they won’t be offering you to stick with them after that. They usually employ this when accidents start piling up and they want to cut their losses on a risky driver, but that driver isn’t an immediate threat to their business or public safety behind the wheel.
When a company does not renew a policy, they’re legally obligated to give you written warning a few weeks to a month ahead of time. This is like their way of saying, “We’ll give you some time to find a new place, but you can’t stay here anymore.”
Note: this method isn’t used exclusively by car insurance companies. Other coverage like home insurance can be cancelled with due notice if the insurer thinks the customer is costing them money, but car insurers are certainly the most commonly-heard-of to outright oust a customer, with warning or otherwise.
A company is allowed to cancel a policy on the spot when something really bad happens, like a DUI or a license suspension. They can do this without warning because something must have happened where the government agrees the policyholder probably won’t be driving (legally) anywhere or anytime soon.
There’s one other way an insurance company can dismiss you immediately. When you first apply for insurance, companies want to get you in the door as soon as possible, but they want to have an out in case they get seller’s remorse.
That’s what the “underwriting period” in the first few months is for: to review your application and see if there are any discrepancies they don’t like. If they have reason to think you lied on your application, they can back out of the policy instantaneously and do so without giving you any reason whatsoever.
What Do I Do if This Happens to Me?
If a car insurance company drops you, it would be perfectly reasonable to worry about it, but it’s good to remember other people have been through worse predicaments and managed to make it out fine.
Try Reasoning with Them
You may very well have the option to just call their bluff. Some companies allow you to file appeals to argue they didn’t have good enough reason to drop you. If you show them your determination (and loyalty) to get them to insure you again, they might just agree with you agree to let you back into the fold.
If they cut you off because of delinquent payments, the solution may be either very easy or impossible: some insurers will gladly reinstate you if you can just pay your debts, others won’t bother taking your calls.
Take Your Business Elsewhere
In the event your original insurance company won’t take you back, you do need to go searching for another one. We here at NAN aren’t much for barking orders at complete strangers, but you really can’t be driving without car insurance. Most states have severe penalties for driving uninsured, and then it’ll be really hard to get insured when you get your license back.
If you’re having trouble finding a competitive rate, try reaching out to an insurance broker. Brokerage firms don’t sell one specific company’s insurance, but rather search for the cheapest quotes they can find from different companies. Actually, this might be a good idea for anybody looking for insurance in general.
The insurance coverage you find after your original insurer cuts you loose will probably be much more expensive or much more limited (or both) as a result of your driving record, but it’s better than engaging in activities that would validate your insurer’s decision to drop you in the first place.