You never want to hear the words: "Your policy has been canceled" from an insurance company. Finding out that your car insurance policy hasn’t been renewed 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. A Colorado Auto Insurance policy can be cancelled if:
- 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. At Southern Colorado Insurance Center, we give our customers between 10 and 30 days notice. In a notice, an insurer must tell you why it has decided to cancel your car insurance policy.
What's more, auto insurers have 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 typically means there was a blemish on either your driving record or credit record that makes you an unacceptable risk.
Cancellation is like a dark cloud
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, 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 take on such a high risk.
If you find that your policy has been canceled and the insurer is not willing to reinstate it, contact us. Our experienced agents at Southern Colorado Insurance Center will work with you to find the best rate available.
Nonrenewal is less restrictive
When your policy expires, either you or your insurer can decide not to renew your policy.
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.
If an auto insurer decides not to renew your policy, it must send you a notice. State laws vary, but just like a cancellation, you should receive 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 you receive a reason and believe it to be unfair, contact your insurance company's consumer affairs division or call Colorado’s department of insurance.
If your Colorado auto insurance has been cancelled or not renewed, contact our qualified agents at SCIC! We can help!