What if your auto insurance company drops you?

It sounds terrible when you hear about your auto insurance policy being dropped by your carrier. Such news are just unwelcome surprises that nobody wants to hear ever. There are two ways your policy can be dropped by your auto insurance company - either through cancellation or nonrenewal. Nonrenewal occurs when the company doesn’t renew your policy at the end of the term. This can either be due to (i) internal company policies, or (ii) due to your growing stature as a risky proposition to the company as of several claims. Cancellation is more harsh and instantaneous in nature and takes place when the company decides to cease your coverage prematurely. If you find yourself in the midst of any of these situations, here are things you should do: Non-Renewal: There can be more than a number of reasons than just your driving habits for non-renewal of your policy. For instance, the company may be phasing out a certain kind of policy or making vast changes in your region. No matter what the reason is, you’ll get notified in advance about the same by your insurer. However, the gap between the non-renewal date and the day you are served depends on your state law. For example, in California your insurance carrier must provide you with a written notice of nonrenewal at least 30 days before the end of the policy or 20 days in advance if the reason of nonrenewal is failure in paying premiums. In such a scenario, start shopping for a better deal with another company. A nonrenewal has no effect on your eligibility to get a better deal. Cancellation: Cancellation is a serious stigma since it occurs due to your behavior. Most insurance carriers often cancel policies due to:

• Misrepresentation on applications
• Driving license suspension or revocation
• DUI convictions
• Numerous accidents or moving violations
• Nonpayment of premiums

Whatever, your insurer must provide due notice before doing anything. In California, if you are not paying your premiums, the insurer must deliver a cancellation notice at least 10 days before the effective date. However, if the cancellation is due to any other reason, the cancellation notice should be delivered 20 days before the effective date. The best part is, your insurer will refund any premium that wasn’t used. If your policy gets cancelled, you’ll probably have a tough time finding similar coverage from reputed insurance carriers. There are chances that you’ll probably have to pay more to get coverage through the nonstandard insurance market. Depending on your particular reason behind cancellation, you’ll probably have to pay 10%-50% more in premiums to get a similar policy from the ‘nonstandard’ market.

How to fight back?

Essentially. If you believe your nonrenewal or cancellation was unfair, you can get in touch with your agent or insurance company and ask for the reasons in writing. Perhaps, there has been a mistake from the company’s end and just a few words can fix the entire thing. However, if you think that the insurance company’s decision is not fair or illegal, you can file a complaint with your state insurance department.

Do you have any option left?

Certainly. Welcome to the nonstandard market. According to the Insurance Information Institute, about one-fifth of the insurance market constitutes these policies. Apart from the at-fault drivers, the ‘nonstandard’ market also includes very young as well as elderly drivers, drivers with bad credit or lapsed coverage, immigrants having no U.S. driving history, and drivers owning ‘exotic’ cars. Apart from speciality insurers, major insurance firms also issue nonstandard policies. For example, Nationwide offers nonstandard insurance policies through its subsidiaries namely Titan and Victoria, and American Family Insurance through The General. If your records are too bad and you don’t even qualify for a nonstandard policy, you can apply for your state’s ‘last resort’ insurance plan. AIPSO makes stuff easier for you by providing a state-by-state list of these plans. Times change. Today’s tickets, accident and even DUIs will fall off your records one day. Maybe within a couple of years you’ll once again become eligible for standard insurance coverage. In the meantime, try your best to uphold a clean driving record and restore your image of a safe driver.