Finding yourself stuck without auto insurance coverage is against the law (if you’re still driving) and potentially financially ruinous if you are involved in a crash. Plus, when you do find an insurance company, the gap in your coverage will almost always mean a higher premium. So avail yourself of the following scenarios and do your research. And it’s never a bad idea to do a little insurance shopping so you have a backup in mind, just in case.
1. Health issues
Several states have laws on the books stating that car insurance companies can drop customers who develop health problems that could make driving unsafe. For instance, epilepsy, a condition that causes seizures, is a medical issue for which many states permit insurers to drop customers, unless they can prove the condition won’t affect their driving. But luckily it isn’t a straight line from diagnosis to loss of insurance.
2. Making multiple claims in a short period
Even if you’re the victim of crime or experience an extreme weather event and need to make a claim, it can spell trouble for your insurance policy. It might not seem fair, but the auto insurance industry is built on calculating risk, and making too many claims is a good way to up your chances of having your policy canceled or not renewed. Richardson says that claims, just like tickets and crashes, stay on your driving record for three years. Filing more than one claim a year could cause your insurance company to drop you. So, say your vehicle is vandalized a few times, or stolen, or your vehicle is carried away by a flood, you’ll make a claim with your insurer, and rightfully so, but making too many claims (of any type) can make you too expensive of a customer to keep around.
3. Your auto insurance company shuts down in your area
This scenario is a definite case of “it’s not you, it’s me.” Businesses fail all the time, and auto insurance companies are not immune. Even subsidiaries of national brands can shutter, leaving part (or all) of your insurance portfolio up in the air. Fortunately, there are steps you can take to reduce the chance of signing on with an insurer that is more likely to fail.
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