Summary of reasons that car insurance can be canceled

When you buy an auto insurance policy your coverage is not necessarily locked in for the entire policy term. Certain problems can cause the insurance company to cancel a policy. Timelines and acceptable reasons for cancellation can vary by state, but often the rules look like this:

Cancellation any time for nonpayment:

The insurer can cancel you any time if you’re late with the premium payment. The notice time required varies by state but is often 10 days.

First 60 days of a new policy:

Within the first 60 days of coverage for a new policy, an insurer may be able to cancel for valid reasons defined by state, such as the discovery of information that changes their decision to sell you a policy. In some states insurers can cancel for any reason except certain prohibited reasons within 60 days.

After 60 days:

An insurer can typically cancel your auto insurance only for reasons such as:

  • You knowingly made a false statement on your car insurance application that would have affected the company’s decision to sell you insurance.
  • Your driver’s license has been suspended or revoked.
  • You knowingly made a false “material statement” for a claim (meaning something that would have affected the insurer’s decision).

The required notice time varies but could be 15, 20 or 30 days.

False statements that can result in cancellation could include:

  • A different garaging location for the vehicle than originally reported.
  • A different use of the vehicle than what was stated, such as a car actually used for a delivery service or a ride-sharing job like Uber.
  • The driver’s license for someone on the policy has been suspended or revoked.
  • You gave false information about who drives the car.


Common reasons car insurance can be canceled mid-term

Prohibited auto insurance cancellation reasons in California

States generally define their own lists of prohibited reasons for canceling someone’s car insurance. For example, California law says:


No insurer shall refuse to issue, cancel, or decline to renew a policy because of the age, sex, race, color, religion, ancestry, national origin, marital status or sexual orientation of an insured or prospective insured. Also, policy conditions or types (including limits) of coverage shall not be restricted, modified, excluded, or reduced on the basis of the sex, marital status or sexual orientation of the insured or prospective insured.

No insurer shall refuse or cancel a policy solely because the applicant or insured is employed in a specific occupation or is on active duty service in the Armed Forces of the United States. Also, no insurer shall cancel a policy because of language, meaning the ability to read, write, speak or comprehend English.

An insurer cannot cancel or nonrenew due to the following, as it does not constitute an increase in hazard: the physical or mental health of either the insured or any principal or occasional driver of the insured vehicle, unless the Department of Motor Vehicles has suspended, revoked, or refused to issue a license pursuant to the suspension of a license, and the suspension is not removed prior to the time that the nonrenewal or cancellation of the policy becomes effective.

No insurer shall cancel or fail to renew a policy or charge a higher rate solely because of a physical handicap if it has been compensated for, if necessary. The definition of physical handicap for purposes of this law refers to people who have suffered an impairment of physical ability because of amputation or loss of function or hearing or speech impairments. The insurer may require that the handicapped person furnish proof that he or she has qualified for a new or renewal driver's license through the California Department of Motor Vehicles since the occurrence of the handicapping condition.

No insurer may cancel the policy or raise the premium solely because a blind insured frequently changes operators. The blind insured may be excluded. The insurer may apply its usual underwriting and rating criteria to the operators.

No insurer may cancel a policy or exclude coverage solely for the reason that the insured is performing volunteer services consisting of providing social service transportation for a nonprofit charitable organization or governmental agency. Social service transportation means transportation services provided to either individuals who are senior citizens or individuals or groups of individuals who have special transportation needs because of physical or mental conditions and supported in whole or in part by funding from private or public agencies.

How will I find out my car insurance is canceled?

Your car insurance company will mail you a notice of cancellation. If you’ve signed up for electronic document delivery with the insurer, the cancellation notice might come via email.

Can I get my policy reinstated?

If your policy was canceled, you may be able to get it reinstated by paying what’s due, assuming the “risk” is acceptable to the company. For example, if the policy was canceled because your driver’s license was suspended, and it’s still suspended, don’t expect to get coverage back.

What happens if I made a claim and then my policy is canceled?

Cancellation does not affect a valid claim that happened prior to the cancellation date. The insurer is still obligated to pay valid claims.

Will my car loan company find out the insurance is canceled?

If a policy is canceled, the insurer generally also sends a notice to the lienholder or, if a car is leased, to the lessor.

Will a car insurance cancellation affect my insurance rates?

Having your car insurance canceled is a black mark on your record and will likely cause higher rates when you buy new insurance. Newer cancellations could affect your rates more than older ones.

When can a car insurance policy be void?

Separate from cancellation is the possibility that a policy could be void. This could happen in cases of fraud. An insurer could declare that your coverage is void and it won’t pay a claim if it discovers that the policy was “obtained or renewed through material misrepresentation, fraud or concealment of material fact.”

For example, if you gave your parents’ address for the policy but have in fact been living somewhere else, and make a claim, the insurer could void the policy.

Car insurance cancellation vs. nonrenewal

A car insurance company could decide not to renew your policy at the end of the policy term. If this happens, they must generally give you 30 days’ notice before the policy expires. During those 30 days you’ll want to compare car insurance quotes and have a new policy ready to take effect when the previous one expires.