Car insurance is something that all of us need to protect us from the financial burden that car accidents and breakdowns could potentially cause us. Needless to say, shopping for car insurance is just a normal part of becoming a responsible driver.
Finding the right company to do business with can cost both time and money. So let’s imagine that you have finally done your homework, found a car insurance company that aligns directly with your needs, only for them to cancel on you at the first sign of trouble.
This undesirable scenario is rare, but it does happen. In this article, we will explore some of the reasons why your car insurance company could drop you.
Health Issues
This is a tough one to swallow, because health issues are for the most part, out of our control. However, many states allow for car insurance companies to drop policyholders who have been diagnosed with a health condition that inhibits them from driving safely.
For example, if you have epilepsy, a medical condition that causes you to experience seizures, your car insurance company might be able to cancel you from being insured. Fortunately, there are ways that you can prevent this from happening.
If you are able to prove that your medical condition doesn’t negatively affect your ability to drive safely, you might be in the clear. On the flip side, if your doctor alerts your state’s Department of Motor Vehicles (DMV) that you are no longer fit to drive, your license will likely become suspended. If your license gets suspended, your insurance company will be notified, and only then can they drop you.
This means that your insurance company would technically be dropping you for licensing reasons, as opposed to just dropping you for health issues. In any case, one will ultimately lead to the other. These are some common examples of illnesses that could cause you to lose your insurance coverage:
- Unstable diabetes.
- Heart conditions.
- Arthritis.
- Chronic depression.
- Substance addictions.
Depending on the nature of the diagnosis, some of these can cause you to have your license suspended or revoked, while some will only call for a license restriction. You might also find yourself in a situation where you have been diagnosed with a serious health condition, but your doctor doesn’t notify the DMV. If this happens, it’s important that you are honest with your insurance company about your condition upfront rather than trying to hide it. If you are to get into an accident due to a health condition, it will work out for you better in the long run if you were honest from the beginning.
Filing Too Many Claims In A Short Period Of Time
If at any point, you are deemed “high risk” by your insurance company, it could result in you being dropped. Even if the events leading up to your property damage or car accident were out of your hands, your car insurance may still want to drop you. It’s nothing personal, but car insurance companies have to calculate risk appropriately.
Unfortunately, filing too many claims within a short timeframe can up your chances of being cancelled or dropped from your insurance company.
Car insurance claims usually stay on your record for three years, so if you are filing a claim every year, you could be in trouble. Even if your car was vandalized, stolen, or compromised due to bad weather, too many claims can be a red flag to your insurer.
Note that there is a difference between your insurance company cancelling your policy and choosing to not renew it. If your insurer cancels your policy, it’s effective immediately. If your insurer opts for a non-renewal of your policy, it means that they will keep you on until your term agreement ends, at which point you will have to find a new company to do business with.
It goes without saying that the latter is probably better than the former, because at least you will have time to figure out your next steps.
Your Car Insurance Company Stops Doing Business In Your Area
Sometimes things happen that are completely out of your control, and this scenario is just another one of those cases. If your car insurance company has a branch in your area that isn’t doing so hot, you can get dropped simply because they have to shut down. While this is usually just one of those unforeseeable life happenings, there are some precautions you can take to make sure you don’t end up left in the dust:
- Always review the ratings of the company you are getting your insurance from. Here are some of the best places to view ratings:
- A.M. Best ratings
- J.D. Power ratings
- J.D. Power’s claims satisfaction survey.
- Make sure to only buy insurance from licensed companies and agents.
- Check out the car insurance complaint index for your state. It compares complaints among various insurers so you can get an idea of which companies are struggling.
- Let your state’s department of insurance help you. You can get a ton of valuable information online or through their help line.
As you can see, there are many reasons why car insurance companies can choose to stop doing business with you, even if it seems unfair. Keep in mind that while these things do happen, they are rare. As long as you keep an open line of communication with your insurer, you should be in the clear in most cases.