Whether the notice comes as a surprise or you’ve been dreading an already-late payment, discovering your auto insurance provider canceled your insurance coverage is an overwhelming occurrence. But before the stress creeps in, know that this is not an end-all situation.

If you’re asking, “can I reinstate my car insurance?” The answer is probably. Despite your circumstances, you almost always have options.

Yes, losing your coverage for even a short time likely comes with some financial (and potentially legal) difficulties. However, reinstating your insurance resumes your policy with your former insurance carrier. To that end, quickly reinstating your auto insurance can help you minimize any penalties—if not avoid them altogether. There can be serious consequences of driving without insurance, so addressing any coverage issues with your insurance company should be a top priority.

Confirm Your Auto Insurance was Cancelled

Before you start to worry about reinstating your auto insurance, have you confirmed its cancellation? First, contact your insurance provider to check on the status of your policy. Most states require insurers to provide notice of missed payments and scheduled cancellations.

Before you contact your insurer, be sure to have the following information prepared:

  • Insurance policy number

  • Policy term

  • Any notices regarding missed payments, cancellation, or nonrenewal

  • Most-recent bill(s)

  • Household driver and vehicle information

Grace Periods

While missed payments eventually lead to cancellations, being only a few days delinquent typically falls within most insurance companies' grace period. Paying an overdue bill during a grace period likely limits any penalty to a late fee. The grace period for an auto insurance bill depends on your provider (or your state residence) and may last anywhere from 10 to 20 days.

Determining whether grace period protections have kept your policy from lapsing will separate a quick reinstatement from more complicated processes.

Non-Lapsed vs. Lapsed Coverage

The good news is that if you’re still in your grace period, your policy hasn’t been canceled. “Non-lapsed” coverage means that your vehicle remains insured despite delayed payment. Catching up on your payment—as well as any late fees or other assessed penalties—will quell your concerns.

Reaching your grace period’s expiration threatens your auto insurance policy with cancellation. Once canceled, your coverage has “lapsed” and must be reinstated. Lapsed insurance refers to any amount of time where a driver has lost coverage and it almost always adds financial penalties and license, registration, and other legal hurdles (in some states).

Preemptive Policy Protection

If you fear that insurance cancellation may be hiding in a speed trap behind the billboard at the next mile marker, take preemptive action. Contact your provider to inform them of the expected late payments and discuss your options.

Giving notice of an expected late payment helps prevent situations where reinstatement becomes necessary. Speaking with your insurance agent may grant you flexibility with due date extensions or partial payments. Some insurers even allow policyholders to submit these requests directly from their app.

Covid Relief

During the ongoing Covid-19 pandemic, many auto insurance companies have begun offering extended grace periods to help their customers manage current economic hardships. Additionally, Covid-related remote workers may be able to lower their rates or receive relief due to the reduction in their commuting miles.

Over 80% of American auto insurance companies announced refunds or credits totaling $6.5 billion towards the beginning of Covid-19 shutdowns. Calling your provider to request relief may ease any payment burdens contributing towards a coming cancellation.

Why Was My Insurance Cancelled?

Providers’ cancellation reasons usually fall into a few specific scenarios but mainly occur in response to a policyholder’s actions. The avenue toward reinstatement or finding a replacement policy may depend on the cause of cancellation.

If you fear your insurance has been canceled (or soon will be), the first step towards reinstatement should always be contacting your provider to learn more about your situation.

Depending on your state of residence, cancellation typically requires 10 to 20 days advance notice to allow the policyholder to find a new provider. Your auto insurance company may cancel your coverage at any time if it determines you to be at fault for one of the following:

  • Nonpayment – Failing to pay your bill after your provider’s grace period elapses will eventually result in cancellation.

  • Nondisclosed or inaccurate information – When receiving auto insurance quotes, you must accurately respond to information requests (e.g., driver history, vehicle information or modifications). If your provider determines that you misrepresented policy information, your coverage becomes subject to cancellation.

  • License or registration issues – Your insurance provider may cancel your coverage following suspensions or revocations of your license or registration.

  • Increased at-fault incidents – Quickly accumulating at-fault accidents and traffic violations may cause your insurance company to consider canceling your coverage.

Aside from sending advance notice, providers don’t face restrictions on when they can cancel your insurance.

Nonrenewals

You or your auto insurance provider may decide not to renew your coverage beyond its current term. Companies choose not to renew contracts for various reasons, and not always because of policyholders' actions. While your provider may decide your risk level has increased or that you have had too many delayed payments, nonrenewal may also be due to a business decision regarding coverage locations or driver pools.

If your insurer decides not to renew your coverage, you still have time to find a new policy.

As specified by your state’s laws, typically providers must send advance notice of any nonrenewal. Most importantly, nonrenewals don’t carry any reinstatement penalties. So long as you find new coverage before your existing contract expires, you won’t have to deal with any additional headaches.

Cancellation By Mistake

Contacting your provider may reveal that the cancellation was a mistake. If so, your provider should reinstate your coverage without any issues or penalties.

Recourse for Unfair Cancellations and Nonrenewals

Ask your insurance company why your policy has been canceled or marked for nonrenewal. If the provided reasons seem unfair, contact their consumer affairs division. For further escalation, contact your state’s insurance department regarding recourse.

The National Association of Insurance Commission (NAIC) maintains updated contact information for insurance companies and resources for consumer complaints.

Lapsed Coverage Consequences

Coverage lapses caused by canceled auto insurance carry financial and (sometimes) legal penalties even after your reinstatement. Penalties can include:

  • Full financial culpability – Incurring an accident without insurance means all repair, medical, legal, and other costs will come directly out of your pocket.

  • License suspensions and fines – Some states require that their Department of Motor Vehicles receive notice from insurers following coverage cancellations. Lapsed insurance can lead to suspended licenses and fines in these states without ever being pulled over.

  • Insurance rate increases – Even after successfully reinstating an insurance policy, allowing your coverage to lapse at all will likely result in rate increases. The longer your policy remains lapsed, the higher your rate may increase.

  • Vehicle repossession – Terms and conditions for leased vehicles and auto loans almost always require full coverage. An insurance cancellation will eventually lead to repossession.

Consequences of Driving Without Insurance

Driving without insurance is illegal in all but two states (New Hampshire and Virginia, which still require proof of financial responsibility in the absence of a policy). In addition to the result of lapsed coverage, the legal consequences of driving without insurance can make life incredibly difficult.

Consequences may include:

  • Tickets

  • Suspended license and registration (plus reinstatement fees)

  • Returning license plates to the DMV

  • Filing and carrying an SR-22 form (i.e., a certificate proving your insurance coverage)

  • Increased rates

Can You Buy A Car Without Insurance?

If you need a new horseless carriage despite a canceled policy, you might be wondering, “can you buy a car without insurance?”

Regardless of a fixation on the shiniest new model—or if you’ve stumbled onto that once-in-a-lifetime “barn-find” that needs a little love—purchasing a vehicle does not require insurance. Obtaining a car loan and driving your new vehicle home, on the other hand, is a different story.

Before purchasing, check your insurance policy to see if your provider offers a grace period for adding another vehicle to your coverage.

How to Reinstate Cancelled Auto Insurance?

Begin by collecting the relevant policy information listed at the top of this article. Next, contact your insurance provider and ask to reinstate your canceled policy. Unfortunately, there is no guarantee of reinstatement. If your former insurer agrees, they will still require any missed payments and will likely assess fees.

Different insurers may enforce additional penalties as part of your reinstatement process, such as changing payment plans (e.g., monthly to annual) and waiving the right to claim incidents that occurred during the lapsed coverage.

Picking A New Policy Provider

If your former insurer does not agree to reinstatement, you’ll have to find coverage from another provider. You cannot transfer a policy to a new provider, so you'll have to gather new insurance quotes.

Reinstatement remains the best option, if available. On top of the higher rates and premiums that come with replacing a canceled policy, shopping for new quotes remains time-consuming.

To cut down on quote gathering time, try comparison shopping online.

High-Risk & State Risk Pool Insurance

Insurers sometimes determine that a driver presents too much liability. To obtain coverage, these drivers can request policy quotes from high-risk insurers.

If a high-risk insurer won't offer you coverage, drivers can still seek policies from their state's public market, which is segmented by "assigned risk pool." As some states may require standard insurers to participate in this market, you can still find quality coverage with big-name providers.

Online Auto Insurance: Comparing Quotes, Simplified

Trying to outrun your insurance cancellation can breed adverse consequences—the longer you go, the more your penalties will increase.

If you can’t reinstate your insurance with your previous provider, and you’re shopping for new quotes, then you’re in the right place. Here at Online Auto Insurance, we take the hassle out of finding and comparing car insurance quotes.

With us, you can simplify your search, identify competitive rates, and find a policy that works for you. Let us help you reinstate your insurance so you can take to the road with the peace of mind you deserve.

Sources:

CNBC. Here’s exactly what relief auto insurance companies are providing drivers during the coronavirus pandemic. \ https://www.cnbc.com/2020/04/15/what-types-of-relief-insurers-are-offering-drivers-during-the-pandemic.html

Insurance Information Institute. What’s the difference between auto policy cancellation and nonrenewal? \ https://www.iii.org/article/whats-the-difference-between-auto-policy-cancellation-and-nonrenewal

Progressive Insurance. What to do if you have an insurance lapse. https://www.progressive.com/answers/insurance-lapse/

Motor1. My Car Insurance Got Cancelled: What Now? https://www.motor1.com/reviews/404679/my-car-insurance-got-cancelled/