Can I cancel my car insurance after an accident?

Canceling auto insurance too early comes with risks. Understanding how auto coverage works and the requirements you must meet can help you make smart choices in the aftermath of an accident.

Auto insurance is a legal requirement in most states. There are several penalties you could be subject to if you drive uninsured, from financial to legal complications.

Accidents occur without warning and are stressful situations. Your car insurance is there to help in these times to provide financial relief for accepted third-party losses. These include medical bills as well as property and vehicle damage.

Am I permitted to cancel my car insurance policy after an accident and still file a claim?

You must have an active insurance policy in place on the day of the incident to file a claim. You can cancel the policy after that date and still receive the benefits of your coverage plan for the reported accident.

If you are more than 50% at fault, you and your insurance are responsible for paying out the third-party losses. Your policy type and coverage limits determine if a first-party claim qualifies for coverage:

• Comprehensive coverage. Pays for repairs to your vehicle after a non-moving incident has occurred, including theft, flood loss, and an act of nature, such as a falling tree branch
• Collision coverage. Pays for repairs or replacement of a vehicle damaged while driven
• Uninsured/underinsured motorist protection. Pays for your medical care and bills when the at-fault party doesn’t have insurance
• Medical payments. Pays for medical bills resulting from a vehicular accident

Understand the level of coverage you have, so there are no surprises.

When is it a good idea to cancel my auto insurance following an accident?

There are several reasons why you could choose to cancel your insurance after an accident. One of the most common is if you totaled your car and you don’t have another vehicle to drive at present. do I have to pay insurance for a totaled car  it doesn’t make sense to continue to pay to insure a vehicle that isn’t drivable.

Keep in mind that there is the possibility of penalization for a gap in coverage if you cancel immediately. You may want to wait until you receive confirmation of the settlement and you’ve signed the title over before you end your policy.

Poor customer service is another reason why many people cancel. If you have a bad experience with filing your claim or reaching a settlement, you may not want to continue to give the same company your business.

Even a minor accident can raise insurance rates and tempt you to cancel your existing policy. When you expect a higher bill, consider switching to another company instead. Ensure that you time everything correctly, so the new policy starts immediately when the old one ends.

What are the potential consequences of canceling my policy?

Although your existing claim isn’t affected, there are consequences for canceling your auto insurance after an accident. 

First, you must have active coverage if you still have a vehicle you intend to drive. Gaps in your insurance can result in a fine from the DMV and possibly the suspension of your license or vehicle registration. They also typically cause future rates to increase. In most cases, you must keep insurance on a totaled car until it’s signed over to the insurer. 

You may need to pay a fine if you cancel your policy without notice. Penalties for driving uninsured include fines, citations, and having your car impounded. Check the regulations in your state to understand exactly what rules apply and how to stay in compliance.

Free Car Insurance Comparison

Enter your ZIP code below to view companies that have cheap car insurance rates.

 Secured with SHA-256 Encryption

Can my insurance company cancel my policy?

Under some circumstances, your insurance company may find a reason to cancel your policy. Acceptable reasons vary by state. 

In most cases, a company cannot cancel your coverage if you have had the policy for more than 60 days unless you fall into one of these categories:

• You have not paid your bill
• You have misrepresented information or committed fraud
• Your driver’s license or registration was suspended
• You have too many at-fault accidents or traffic violations
• You’re medically unable to drive safely
• Your vehicle is unsafe

Many companies choose to opt for non-renewal instead of cancellation unless the situation is severe. Your policy will expire after the current coverage period, and you must find a new insurer. The company will send a letter of cancellation or nonrenewal before your coverage ends, explaining the action and effective date.

It’s best to avoid having your insurer cancel, if at all possible. The information stays on your record for other companies to see and can lead to higher rates.

Minimum Coverage Requirements

The compensation and coverage you receive from a claim depend on your policy. Most states require that all drivers have liability insurance at a minimum. It’s illegal to drive without it. Liability coverage helps to pay for the expenses of the other party when you are at fault.

Driving without insurance is risky for several reasons. If caught, you could face legal consequences, such as expensive fines and penalties, including jail time. You are also responsible for paying for damages and medical bills from an at-fault accident out of your own pocket.

Case Studies: Can I cancel my car insurance after an accident?

Case Study 1: SafeDrive Insurance

In this case, John had been a loyal customer of SafeDrive Insurance for several years. Unfortunately, he was involved in a severe car accident that resulted in significant damage to his vehicle. Due to the high repair costs, John started considering canceling his insurance policy to alleviate the financial burden.

However, upon reviewing the terms and conditions of his policy, he discovered that SafeDrive Insurance required him to fulfill his contractual obligations until the policy term expired. Despite the accident, John was unable to cancel his car insurance immediately and had to continue paying premiums until the policy renewal date.

Case Study 2: ShieldGuard Auto

Samantha had recently switched her car insurance to ShieldGuard Auto when she got into a minor collision. Feeling dissatisfied with their claims process and the premium rates, Samantha decided she wanted to cancel her policy. She contacted ShieldGuard Auto to inquire about canceling her car insurance after the accident.

Surprisingly, ShieldGuard Auto had a provision in their policy that allowed policyholders to cancel their coverage within a specified time frame after an accident without penalty. Samantha was relieved to learn that she could terminate her policy without any financial consequences, given the recent accident.

Read more: How do I terminate my car insurance policy?

Case Study 3: TrustSure Car Insurance

In this case, Michael had been insured with TrustSure Car Insurance for several months when he experienced a major car accident. After assessing the damage to his vehicle, he decided that it would be more cost-effective to purchase a new car rather than repair the extensively damaged one.

Michael promptly contacted TrustSure Car Insurance to cancel his policy, assuming that his coverage would no longer be necessary. However, he discovered that TrustSure had a clause in their policy that stated coverage could only be canceled after an accident if the insured vehicle was declared a total loss.

Unfortunately for Michael, since he chose not to repair his car and it didn’t meet the total loss criteria, he was unable to cancel his car insurance until the policy renewal date.

Free Car Insurance Comparison

Enter your ZIP code below to view companies that have cheap car insurance rates.

 Secured with SHA-256 Encryption

Final Thoughts on Canceling an Insurance Policy After an Accident

If you don’t wish to continue your coverage for any reason after involvement in a car accident, consider keeping your current policy in place until the finalization of your claim. This protects your driving record and lets you avoid potential consequences.

When you do decide to cancel your insurance, go about it in the right way. Wait until you sign over the title if you cancel completely because your car was totaled. Time the start date of a new policy correctly when you switch to another insurer. Avoid gaps in coverage and driving uninsured, as both have consequences.

Compare rates from several companies to find the best coverage at an affordable price whenever you need to change policies. Stay safe on the road, and protect yourself from legal and financial repercussions by maintaining active auto insurance.

 

Free Car Insurance Comparison

Enter your ZIP code below to view companies that have cheap car insurance rates.

 Secured with SHA-256 Encryption