A requirement for having the privilege to drive a vehicle is maintaining an active insurance policy through a licensed personal car insurance agency.

In most cases, paying the auto insurance bill on time is all that is required to keep the policy active and protective.

There are times when personal automobile insurance agencies can cancel an active policy on their own; however, it is important that drivers understand how and when this can happen so they can avoid these situations.

The Difference Between Cancellation and Non-Renewal

When a personal car insurance company drops the coverage on a customer’s vehicle, it means that the vehicle and driver are no longer protected by the driver’s liability insurance as well as comprehensive or collision coverage if that was carried on the policy.

Policy cancellation means the auto insurance company has stopped the driver’s coverage right in the middle of a policy period and is refusing to continue the policy.

Non-renewal means that the agency is refusing to let the customer renew their personal auto insurance coverage at the start of a new policy period when the bill comes due.

Though they both mean the driver and vehicle will no longer have any insurance coverage, having a policy canceled is worse than non-renewal, as it infers the customer has become enough of a driving risk that the company wishes to end coverage as soon as possible, even when it means refunding some premiums.

What Are Common Reasons That Personal Auto Insurance Agencies Drop Customers?

Personal car insurance agencies are ultimately in business to protect their customers within a margin of profit so the companies can stay in business.

Based on this idea, some customers can find their auto insurance being dropped when they become a greater liability and cost risk based on the premiums being collected.

Some examples of what can cause a personal automobile insurance agency to drop a customer include:

A history of missed or late premium payments.
Failure to keep the vehicle properly registered and inspected.
Having a driver’s license suspended or revoked.
Making a fraudulent insurance claim.
Having too many at-fault car accident claims in a certain period of time.
Not fully disclosing essential information related to the vehicle or driver that can affect the premium.
A personal vehicle is being used for business purposes.

Contact An Auto Insurance Agency If Coverage Has Been Dropped

Although some of these reasons for cancellation or non-renewal can be negotiated or corrected, others are non-negotiable depending on the individual personal car insurance company’s business policies and their rules for maintaining coverage.

Any time someone learns that coverage from their personal auto insurance agency has been discontinued, they should reach out to their agency to find out why.

To avoid policy cancellations or non-renewals from any automobile insurance agency and to keep premiums as low as possible, drivers must avoid the concerns listed and maintain a safe driving record.