4 Reasons Your Car Insurance Might Get Canceled -- and How to Avoid It

Car insurance is a requirement in most states, but car insurance companies don't have to insure you if they don't want to -- and they can drop your coverage for many reasons.

Here are a few reasons why your insurance company may cancel -- or not renew -- your coverage and how to avoid it before it happens.

1. You didn't pay your premium

Car insurance premiums have soared 26% on average since 2023, making cheap car insurance hard to come by. That has put a lot of stress on some people's budgets, but making late payments -- or no payments at all -- is a quick way to get your policy canceled.

It's not likely that your insurance company will cancel your policy over one missed payment, but frequently late payments could result in a cancellation.

How to avoid it: The best way to avoid late auto insurance payments is to set up automatic premium payments from your checking account. Many insurance companies will even give you a discount for opting in for automatic payments.

2. Too many accidents over a short period

All insurance companies are constantly evaluating risk. If you're involved in too many accidents, even if they technically aren't your fault, your insurance company still considers you too risky and may not renew your policy.

While there's no set standard for how many accidents it will take to cause your insurance company to drop you, Progressive Insurance says multiple accidents within a three-year window could result in your policy not getting renewed.

How to avoid it: If you keep getting in accidents, you may want to take a defensive driving course to brush up on your driving techniques and how to avoid high-risk driving behaviors. Many insurance companies will even give you a discount for taking the course, up to 20% of your premium.

3. You work for a ride-hailing company and didn't notify your insurance provider

That's right; car insurance companies may be able to cancel your policy if you drive for a ride-hailing company and haven't told them about it.

Insurance providers consider how you use your vehicle, when you drive it, and how often you use it when creating your policy. If you decide to start using it to drive people all over town, they'll certainly want to know.

Some car insurance companies won't even cover you if you work for a ride-hailing business, while others may require you to get additional coverage.

How to avoid it: This one is simple: Tell your insurance company you want to use your vehicle for ride-hailing before you start doing it. Ask your insurer if your current policy covers it or if you need additional coverage.

4. You file too many claims

If you frequently file insurance claims, your insurance provider will likely not renew your coverage. One or two claims filed occasionally may result in an increase in your premiums, but more than that is a red flag for providers.

For example, if you file a claim when someone backs into your car in the parking lot and then file another claim for your car being broken into several months later, your insurance company may raise your premiums. But if your car then gets stolen a few months after your second claim, your policy might not get renewed.

How to avoid it: Of course, you shouldn't make any insurance claims that aren't valid, but you should also be wary of filing too many claims that can be viewed as excessive by your insurance provider. For example, if you back into the mailbox and slightly scratch your vehicle, you may just want to put up with the imperfection, especially if you recently filed a claim.

Thankfully, you have a lot of control over whether your car insurance policy gets canceled. But if you think our policy is in jeopardy or your premiums are already too high with your current provider, it might be time to do a little comparison shopping.