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5 Ways to Lose Your Car Insurance

5 Ways to Lose Your Car Insurance

Purchasing a new or used vehicle can be an exciting time as you drive around town and visit your friends and family. Purchasing insurance is of course less exciting albeit necessary and is there to protect you and others in the event of an accident. What most consumers don't consider however is that they can actually lose their car insurance coverage by making poor decisions. Auto insurance cancellation or non-renewal are the two ways consumers can lose vehicle insurance coverage. Both normally require 10 to 30 days advanced notice but it's best to never have it happen in the first place.

1. Drive Drunk

Most automobile insurers won't drop coverage after one DUI or DWI but it does create a red flag which can result in higher premiums at renewal and closer monitoring of your policy. Driving drunk has been the primary focus of law enforcement for the last few decades and receives significant well-deserved scrutiny and auto insurance companies are no different in their tenacity.

2. Cause Accidents

Auto accidents happen and the primary concern is that neither party is hurt. Accidents are evaluated for culpability by determining who was at-fault. If you've been in a few accidents but were not found at-fault or partially at-fault then it is unlikely you will have your insurance canceled or premiums increased at renewal. An insurance companies concern is repeated accidents due to reckless driving where you're found to be culpable.

3. Get Tickets

Tickets resulting from any type of moving violation or other infraction such as speeding, failing to stop or reckless driving are always on an auto insurance company's radar. Receiving repeated tickets over a short period of time creates a pattern of poor decision-making and bad judgment. While this may not lead to cancellation it will almost certainly result in higher premiums when you're auto insurance is up for renewal.

4. Stop Paying

It's fairly obvious that if you stop paying your auto insurance it will probably be canceled within a fairly short period of time. Most auto insurance companies will be lenient to a certain extent and will work with consumers who've been good customers in the past. They can apply discounts or adjust payments at least in the near-term. However, if you just stop paying your bill altogether with no communication then your insurance is likely to be canceled sooner rather than later.

5. Lie

Lying will almost certainly result in insurance coverage cancellation due to breach of contract. What this means is that when you sign up or auto insurance you are asked to fill out a lengthy form providing specific information about accidents, citations and who will be driving the vehicle. If you conveniently forget to mention your teenage child will be driving the family sedan and then they are in an accident the claim will probably be paid but then you will most likely be immediately dropped. Lying will always come back to haunt you so provide all necessary information to ensure continued insurance coverage.

Long Term Effects

Losing your car insurance coverage due to cancellation can create additional problems in the future. Chief among these is that any new insurance you purchase will ask about prior coverage cancellations. If it is because of speeding tickets or a couple of accidents you may be able to explain what happened but premiums will probably be cost prohibitive. If the cancellation was because of failure to pay or lying then you may not be able to purchase any auto insurance going forward.

Image by: Bernd