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How Does Canceling My Auto Policy Prematurely Affect Me in The Future?

effects of an auto policy cancelation

Find out what canceling your auto insurance policy now will mean for you down the road.

There are a variety of reasons why you may need to cancel your auto insurance in Carrollton, Texas before your term officially ends.  If you are choosing to cancel for a legitimate reason, then this should not affect your insurability.  However, there are adverse effects of having your policy forcibly canceled by your insurer.  Here’s what you need to know about the impact of a canceled auto policy.

Canceling my policy?

If you are canceling your car insurance because you are selling your car or moving out of state, then your insurer will not hold this against you.  This means that this will not affect your ability to secure affordable car coverage in the future.  That being said, there is a major difference between voluntarily canceling your policy and having your policy canceled.

Insurers only cancel coverage if the policyholder has proven themselves too risky to insure.  For instance, many cancelations occur when the policyholder has missed a payment, filed too many claims, committed insurance fraud, or failed to meet the terms of their policy.  If your policy is canceled, then you will be flagged as high-risk to insure.  As higher risk translated into higher insurance costs, you will have a harder time finding affordable coverage from another insurance provider.

What happens if there’s a gap in my coverage?

When you look around for auto insurance, there are many factors that insurers take into account when determining your premium.  One of the factors they will consider is whether you have had a lapse or gap in your coverage.  If you had a gap, then your insurer will consider you more risky to insure.  This increased risk will translate into higher insurance premiums.  In some cases, insurers will actually refuse to cover you altogether.

In general, canceling your auto insurance for a good reason will not affect your coverage down the line.  It is only when your policy is forcibly canceled or when you do not have car insurance for an extended period of time that canceling becomes dangerous.  Do you have more questions about your auto insurance in Carrollton, Texas?  Then contact the experts at Mike Leonard Insurance Agency.    Our dedicated team is eager to find you the right coverage from one of our many carriers including: Kemper, MetLife, Travelers, The Hartford, Safeco Insurance, Progressive, and American Strategic Insurance.