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Q

What does it mean when your car insurance is cancelled and how do you get it reinstated?


A

The cancellation of an insurance policy means that there is a termination of an insurance contract before the end of the policy period. The car insurance policy can be cancelled by either the insured or insurer before its expiration or termination date.

State laws differ however in general when you apply for coverage and start a new auto insurance policy, the insurance company has the right to cancel your policy for the first so many days of your new policy. This period is known as the binding period.

The binding period is typically 60 days. If an insurer cancels your policy during the binding period, it normally means that it has found a something on either your driving record or credit record that makes you an unacceptable risk.

After the binding period, the company may still cancel your policy if you got the policy for certain reasons, usually that the state law and your policy spells out such as if you obtained your policy through fraudulent means (misrepresenting information), you fail to pay for the premium on or before the date its due, if you did not reveal all the pertinent information required about your vehicle and its drivers or if someone in your household has lost their driving privileges due to suspension or revocation.

State laws vary on the number of days notice an insurer must give you before the cancellation takes effect, but it normally it requires an insurer to give you between 10 and 30 days notice. In the notice, the insurer must tell you why it has decided to cancel your car insurance policy.

Most carriers will usually reinstate a policy that has cancelled due to non-payment if the lapse in coverage has been less than 30 days, and there have been no losses. Some carriers have built in grace periods so read through your policy to see what is said about reinstating it if it is cancelled. If your car insurance has been cancelled you have no auto insurance coverage for your vehicle so if you drive and are in an accident you would not be covered.

Reinstatements are allowed by most companies but only up to 30 days as we noted above. Reinstatement is defined as the restoring of a cancelled policy to full force and effect. The reinstatement may be effective after the cancellation date, creating a lapse of coverage. Some companies require evidence of insurability and payment of past due premiums plus interest. They may also require a signed no-loss form.

Car insurance providers that will reinstate within 30 days will require you sign a statement of no loss. This is a form stating you have not had a loss in the time you had the lapse and that you could and would not make a claim for that time period. Some companies may charge you a reinstatement fee to reinstate your policy.

If your policy has been canceled you may be able to get your insurance policy reinstated by contacting your insurance provider depending upon their rules and your state's laws. Most reinstatements are not considered a lapse in coverage. If your policy cannot be reinstated than you will need to start a new policy either with your current insurer (if they allow) or with a new one.

If you have lost your car insurance due to non-payment and are unable to reinstate your former policy then start shopping for your new auto insurance coverage here with us.


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