Albeit unlikely, it is possible for an insurer to cancel a policy after only one accident. For example, there is a higher likelihood of the insurer canceling the policy if the accident results in the revocation of a driver's license or is alcohol- or drug-related. However, some states allow insurers to cancel a policy within the first 60 days of issue. So, if a policyholder has a minor accident within that period, the insurer could cancel the policy. Most often, insurance companies cancel policies for fraud, payment default, and unregistered vehicles.
Auto insurance companies are in the business of making money, and they do so by hedging against risk. Most drivers will have an auto accident; so, one accident is not likely to affect a policy much. However, if your recent driving record is littered with accidents, speeding tickets, and other moving violations, insurers categorize you as a high-risk driver. Rather than dropping a high-risk policy, insurance companies often wait until such policies are up for renewal and either raise the premiums or choose not to renew them.
- Insurance companies may cancel or not renew a car insurance policy for a driver who has a heavy history of accidents and moving violations or for one with a DUI/DWI conviction.
- Driving under the influence (DUI) can result in the loss of driving privileges, the inability to obtain car insurance, or a high-cost insurance policy.
- Before canceling a policy, insurance companies must issue a notice of policy cancellation.
Do Not Drink and Drive
Nothing good comes from driving under the influence of drugs, alcohol, or controlled substances. Insurance companies are more likely to cancel the policy of a driver who has been involved in an accident while driving impaired. Such drivers, if allowed to retain a driver’s license, can expect their car insurance premiums to skyrocket. If canceled, it is often extremely difficult to find a company that provides coverage to drivers with DUI or DWI convictions.
Most insurance companies will not insure drivers who have lost their driving privileges. To restore those rights, the state Department of Motor Vehicles (DMV) will require a certificate of insurance, commonly referred to as Statement of Responsibility or SR-22. The SR-22 confirms that the high-risk driver carries the minimum coverages required by their state. It is typically required for high-risk drivers with a history of at-fault, uninsured auto accidents and/or DUI or DWI convictions. Insurance companies must file the form with the DMV, but it does not come without a cost. Because the SR-22 indicates high-risk, the insurance company will charge high premiums for basic coverage. Also, not all insurance companies offer the SR-22.
Notice of Cancellation
Insurance companies are required by law to provide a notice of policy cancellation. The notice is often sent at least 30 days before the cancellation date. You are also given a chance to make an appeal on your behalf to the insurance company.