Auto Insurance

How Long Does Canceled Insurance Stay on Record?

If your insurance policy is canceled for one reason or another, you’re probably wondering how it’s going to affect your future rates. If your carrier cancels your insurance policy, it usually stays on record for around five years. During that time, you might be considered a high-risk customer and could be paying more for premiums. Learn about the long-term effects of a policy cancellation and how to prevent a lapse in your insurance.

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What Happens When Your Car Insurance Is Canceled?

If you miss a car insurance payment and your grace period has passed, your insurer will officially cancel your policy. They will notify you of this cancellation by mail, phone, or email. In general, your policy will end around 10-20 days after you receive the cancellation. After that, you are no longer covered and it’s illegal to drive until you get a new insurance policy.

The consequences of canceling your policy can include:

  • Administration fees. Depending on your zip code, you might get charged an additional fee for letting your insurance lapse. In New York, drivers must pay $8 per day for up to 30 days after their insurance lapses. The penalties increase after the 30-day window closes.
  • Repossession of your leased vehicle. Most car manufacturers and lenders require comprehensive coverage on their leased vehicles. If your insurance lapses, your vehicle could be repossessed.
  • Driver’s license and registration suspension. Forty-eight out of fifty states require drivers to carry insurance. If your insurer notifies your local DMV of your policy’s cancellation, you could lose your license and vehicle registration. In some cases, you might need to prove that you have insurance to get them reinstated.
  • SR-22 insurance. If you’re caught driving without insurance, your state might mandate SR-22 insurance. An SR-22 form is a certificate that proves to your local government that you’re legally insured.
  • Lower credit score. If you fail to make a payment and the bill is submitted to a collection agency, your credit score could be negatively affected. This can also affect your insurance premium in some states.

How Does a Cancellation Affect Future Premiums?

Unfortunately, having a canceled insurance policy on record can raise your rates the next time you shop for insurance. If you renew your insurance within the month, you may only see your premiums increase by 9% or less. If you let your insurance lapse for more than 60 days, rates may increase by as much as 48%. In some instances, your insurer will refuse to renew your policy if it’s lapsed for more than two months.

How to Reinstate Canceled Insurance

If your insurance is canceled, the next step is to find new insurance or get your policy reinstated. Reinstalling your car insurance policy means re-establishing the same policy you had before it lapsed. You might need to pay increased premiums, late fees, or reinstatement fees, but reinstating your policy is often easier than shopping for a new one. If you were happy with your carrier pre-cancelation, including your level of coverage and your insurer’s claims process, you might want to stick with the same company.

Your eligibility for a policy reinstatement depends on the length of time that’s passed since your insurance lapsed, your history with lapsed insurance, and your insurance provider. Ask your insurance agent if you can reinstate your policy. If they agree, you’ll probably have to sign a no-loss statement that nullifies any claims you try to make for the lapsed period. If your insurer refuses to reinstate your coverage, you might need to shop for a policy with a company that specializes in high-risk drivers.

If you’re looking for high-risk car insurance, you’ve come to the right place. The General knows that car insurance can lapse for a multitude of reasons, including reasons that are beyond your control. If you have a car insurance cancelation on your policy and are looking for an affordable rate, The General offers the best coverage for drivers with lapsed insurance. You’re even eligible for a discount if you’ve had insurance within the last five years! Get a free car insurance quote in under two minutes or learn more about lapsed insurance via our blog.

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