Why would my insurer cancel my policy?

Technically, in most states your insurer can cancel your policy only if:
  • you fail to pay your premium;
  • you lose your driver's license;
  • you are guilty of material misrepresentation during the application process--i.e., you fail to notify your insurer of a recorded violation, such as a drunk-driving offense; or
  • you fail to report a substantial change of risk, such as buying a high-powered sports car to replace a family sedan.
However, your insurer can choose not to renew your policy for a variety of reasons. Do you have a bad driving record? Have you received a lot of speeding tickets? Have you ever been caught driving drunk? Not only are these scenarios considered unsafe and illegal, they are justifiable cause for your insurer to label you a bad risk and refuse to renew your policy. (Some underwriters may feel compelled to cancel policies after only one accident.) Where do you live? Has the neighborhood changed in the last few years? Have the accident or crime rates risen noticeably? As regions are reassessed periodically, their status could change and you could suddenly find yourself living in a high-risk area, where your insurer's rates may not be adequate to cover losses.