Cancellation or nonrenewal after a claim

Cancellation and nonrenewal are different

In the first weeks of a new policy, the insurer is still checking your application. In Florida and Ohio, the limits on cancellation don't apply yet during that window, so the insurer has more room to cancel. After it, the rules tighten. The window and the list of reasons are set by each state, so two neighbors with the same claim can have different rights.

Neither one takes away coverage for a crash that happened while the policy was in force. That claim is still handled under the policy's terms, even if the policy ends before the claim is paid. Keep sending the adjuster what it asks for, and keep your own copies.

When an insurer may cancel midterm

Two examples show how the rule is built. In both, an accident or a claim is not on the list of reasons for cancelling an established policy.

Ohio adds a longer term too: an auto policy must be issued for at least one year. Its cancellation notice must also tell you that you can ask the superintendent of insurance to review the cancellation if it may rest on wrong information or break the law or the policy, and you must ask by the date the cancellation takes effect.

• The policy number and the date of the notice, which Ohio requires on every cancellation notice.
• The date coverage ends, which can't be earlier than the notice period allows.
• The reason, or a statement that you can get it in writing on request.
• Your review right, where your state gives one, and the deadline to use it.

Nonrenewal after a claim

An insurer that no longer wants the risk usually waits for the end of the term. Notice rules still apply. Florida requires at least 45 days' notice of nonrenewal with the reasons, unless you didn't pay or the insurer offered to renew. Ohio requires notice at least 30 days before the policy expires, with the reason and the information behind it, or an explanation within 5 days of your written request.

Some states also limit nonrenewal for accidents. Florida bars nonrenewal solely because you were in an accident unless the insurer's file shows in good faith that you were substantially at fault, and it may not refuse to renew if you have had only one at-fault accident in the current 3-year period. That protection doesn't cover three or more accidents, regardless of fault, in the most recent 3 years, and the insurer can still nonrenew for other lawful reasons. See Florida claim rules.

A nonrenewal notice leaves you the rest of the term to find new coverage, which is time a midterm cancellation may not give you. Use it. Ask the insurer whether it would renew if something changed, such as removing a listed driver whose record drove the decision, and get any answer in writing. If the reason is one you think the law doesn't allow, say so in your reply and cite the section.

What to do when the notice arrives

1. Find the two key facts: the date coverage ends and the reason. If there is no reason, ask for it in writing; Florida and Ohio both require the insurer to give one.
2. Check the reason. A missed payment that was actually made, a license suspension that has ended or a claim that isn't yours can often be fixed with documents.
3. Pay what's owed before the date on a nonpayment notice, and ask the insurer to confirm in writing that the policy stays in force.
4. Ask for a review. Write to the insurer first, then contact your state insurance department if the reason looks wrong or the notice was late; see filing a complaint.
5. Arrange new coverage before the end date, even while you dispute. If an application asks about past cancellations or nonrenewals, answer accurately.

New insurers will see your claims through reports such as the CLUE database. Check yours for errors before you apply; see your CLUE report.

Why a gap matters

A gap can cost more than the policy you lost, because a crash during a gap can bring a license suspension and a filing requirement. In Missouri, for example, a driver suspended after an accident while uninsured must keep an SR-22 proof of insurance for three years from the date they are eligible to reinstate. Our page on SR-22 after an accident explains those filings.

If your car is financed or leased, read the insurance clause in the loan or lease contract and send the lender proof of the new policy as soon as it starts.

Questions people ask