Can you cancel car insurance after an accident?

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In a nutshell...
  • When you have a car accident, you can file a claim to recoup money to cover damages
  • You must have first-party coverage on your policy before your carrier will pay for your damages or medical expenses
  • Carriers have the right to deny claims when you have let your policy lapse for non-payment or expire
  • As long as you’re filing a legitimate claim for damages and your policy is active, your carrier will pay
  • If your car is totaled or you want to switch carriers, you can cancel your policy at any time post-accident

Auto insurance is a product that you don’t want to pay for when you’re billed but that you’re thankful that you have when you need it. After an accident without the right coverage, you quickly realize how important it is to carry sufficient insurance on your vehicle.

You have to have active insurance whenever you own a car that’s registered to be driven on any public roads.

As long as your insurance is active and you’re carrying the coverage that you need, your insurer will pay out your benefits up to the limits that you’re carrying.

After you’ve filed the claim, you’re not obligated to stay with the carrier. Here’s what you need to know if you want to cancel your policy.

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The Insuring Agreement Says It All

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Your insurance policy is a contract. Both you and the insurance company are entering into this contract for a reason.

The insurance company benefits by collecting regular premiums from you regardless of if you have an accident or not. The policyholder benefits by having coverage to file against if there is any type of covered loss.

All standard insurance contracts have an insuring agreement written into them.

The insurance agreement is a broad agreement that says that the insurance carrier will pay all of the claims that you present as long as you have the coverage, the claims are founded, and you make your premium payments.

Pay Your Premiums On Time to Avoid a Cancellation

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Not only do you have to pay your premiums when you start a policy, you have to make all of the payments that you’re billed for on time after inception.

If you decide that you’re making installment payments, you need to make each installment payment on time or your policy will cancel for non-payment.

There are some companies that will give their customers a little extra time to make their payments, very much like the extra time that your landlord or your auto loan carrier might give you. It’s called a grace period and it can range between 1 and 30 days.

After the grace period ends, your policy will terminate.

If the policy cancels for non-payment, any claim that you file while the policy lapsed won’t be covered.

You do have the option to make a swift payment after the policy cancels to have it reinstated. Making this payment doesn’t erase the fact that you didn’t have coverage for days or weeks.

Filing a Claim After an Accident

It’s never easy to deal with the aftermath of an accident.

Whether it’s speaking with the other driver, getting your car to a shop, filing a claim, or getting a rental car replacement, it’s never fun. Even though it’s not something you look forward to doing, contacting your insurance company post-loss is crucial.

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When it’s a single-car accident, you don’t have to worry about someone else filing a claim against you. In this instance, you could decide to handle everything on your own without involving insurance companies.

It’s when other cars or pedestrians are involved that notifying your insurance company becomes more of a must.

Know Your Coverage Options and Limits

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You’re always going to have third-party coverage on a personal auto policy. This coverage will pay for your negligence when you damage someone else’s car or when someone outside of your car is injured.

The policy will pay up to the per person and per occurrence limits that you have. As long as your coverage was active when the loss occurred, the insurer will cover you.

You may also carry optional coverage that pays for your first-party damages. It’s nice to know if you have any of this on your policy before you’re in a situation where you’ll have to file a claim.

Here are some of the other types of coverage you might need to cover your own expenses:

  • Comprehensive
  • Collision
  • Medical Payments
  • Uninsured Motorist
  • Rental car
  • Towing

Can you cancel your auto policy once you file your claim?

Filing a claim against coverage that you paid for doesn’t mean that you have to stay with the carrier as a policyholder. You can be a claimant and still cancel your policy. When you file the claim after a loss, the claim isn’t just settled in a day or two.

It will take the time to investigate the cause of the loss to determine who was at fault. Determining who was at fault has to be done just so that the insurers that cover the drivers involved can determine which carrier is paying for the damages.

During this time, the claim is still considered open. Just because the claim is open doesn’t mean that you have to keep your insurance through the company you had when the accident occurred.

How do you cancel a policy after an accident?

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Canceling your policy after a loss is a lot like canceling the policy when you sell your car or switch carriers. You have to decide when you want the policy to be canceled and be sure you have all of your documentation in order before you submit your request.

If your car was totaled in the loss, you can request that the coverage ends on the date after the loss as long as you’re not getting a new car. You won’t need proof because the carrier has the information on file.

If you’re switching to a new company, then you should cancel the coverage on the date that the new policy takes effect.

Always check to see if you have to pay a fee for canceling your policy early. You may not pay a fee if you cancel your policy because the car is totaled.

If you buy a new car, you need to get dozens of quotes for coverage elsewhere. Enter your information and then compare the rates instantly.

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