It is possible for an insurer to cancel a policy after only one accident, but it's unlikely. There is a higher likelihood of the insurer canceling the policy if the accident results in the revocation of your driver's license or is due to driving under the influence (DUI) or driving while intoxicated (DWI).
Some states do 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.
Key Takeaways
- 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.
- A DUI/DWI 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.
High-Risk Drivers
Auto insurance companies are in the business of making money, and they do so by hedging against risk. One accident could result in a higher premium, but 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.
DUI or DWI Convictions
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.
Statement of Responsibility (SR-22)
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 coverage required by their state.
The SR-22 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 typically charge high premiums for basic coverage.
Not all insurance companies offer the option of filing an SR-22.
Notice of Cancellation Requirement
Insurance companies are required by law to provide anotice of policy cancellation and the reasoning behind it. The notice is often sent at least 30 days before the cancellation date but each state has its own requirements. You are also given a chance to make an appeal on your behalf to the insurance company.
How Long Does an Accident Stay on Your Insurance Summary?
If you have to pay an increased insurance premium due to a less than favorable driving record, it may not be permanent. While each insurer has different policies, in general, an accident that was primarily your fault and wasn't a serious traffic violation, such as a DUI, will stay on your insurance summary for about three years following a claim. If you have no additional accidents during that time frame, your insurance rates may decrease at your next policy renewal.
Is It Hard to Get Insurance After Being Dropped?
The bigger problem likely will be the cost. If one insurance company drops you, your next insurer likely will charge high premiums depending on the level of risk they associate with your account.
Can Insurance Companies Turn You Down?
They can, but there typically are options even if you can't find coverage easily. Some companies specialize in high-risk drivers, and some insurers participate in state-assigned risk pools. In these cases, the insurers must accept the drivers assigned to them by the state. In either case, expect to pay high premiums.
The Bottom Line
Although the likelihood of an insurer canceling their policy with you is not high, it's important to constantly stay focused and vigilant while driving to avoid this outcome. The exception is with serious violations such as a DUI or DWI; in that case, you'll likely have to provide a Statement of Responsibility or SR-22 and pay a high premium on your insurance.
