Common causes of policy cancellation
A canceled policy is different from a policy that is nonrenewed. Canceled policies happen before the term expires, and insurers may cancel a policy for various reasons. A nonrenewal means a policy won't be renewed once the current term expires.
Here are a few common reasons a policy could be canceled during your policy term.
Lack of payment
This one's fairly obvious. To keep a car insurance policy active, you pay for it through premiums. Just like your cable or electric bills, if you fall too far behind on payments, your policy will eventually be canceled.
Before this happens, however, your insurer will likely contact you to make sure you're aware of upcoming deadlines or impending cancellation. If you're behind on payments, check to make sure your insurer has the right email address and phone number on record to avoid missing these warnings.
Car insurance fraud is committed when someone deceives an insurance company for financial gain.
If an insurance company spots fraud, the driver's policy can be canceled and, in some cases, criminal charges may be filed.
License revocation or a conviction for a major moving violation
If your driver's license is forcibly suspended or revoked for any reason, your insurance company may cancel your policy. If the convicted driver is listed on a policy with other drivers, that driver could be removed from the policy until driving privileges are restored. In some cases, serious moving violations or a high number of accidents can also lead to a canceled policy.
Health issues that may impair driving
In some cases, coverage may be canceled if a driver is diagnosed with a certain medical condition that makes them an unsafe driver. In Illinois, for example, car insurance companies can cancel a policy if a driver is diagnosed with epilepsy and the driver's doctor doesn't provide proof that the condition will not impair driving.