Can I cancel my car insurance after an accident?

You can cancel your car insurance after an accident, or virtually anytime you want, but auto insurance is required to drive legally in most states. You can still file a claim on a canceled policy, as long as you had coverage when the accident occurred. Learn the details.

Free Car Insurance Comparison

Compare Quotes From Top Companies and Save

secured lock Secured with SHA-256 Encryption

Free Car Insurance Comparison

Compare Quotes From Top Companies and Save

secured lock Secured with SHA-256 Encryption

UPDATED: Jun 12, 2022

Advertiser Disclosure

It’s all about you. We want to help you make the right coverage choices.

Advertiser Disclosure: We strive to help you make confident car insurance decisions. Comparison shopping should be easy. We are not affiliated with any one car insurance company and cannot guarantee quotes from any single company.

Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from top car companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.

Written By: Laura BerryReviewed By: Joel OhmanUPDATED: Jun 12, 2022Fact Checked

Here's what you need to know...

  • Car insurance provides financial protection to cover property damage and liabilities
  • You need active coverage on the day of the accident to file a claim and have it honored
  • Gaps in auto insurance can lead to fines and increased rates

Canceling auto insurance too early comes with risks. Understanding how auto coverage works and the requirements you must meet can help you make smart choices in the aftermath of an accident.

Auto insurance is a legal requirement in most states. There are several penalties you could be subject to if you drive uninsured, from financial to legal complications.

Accidents occur without warning and are stressful situations. Your car insurance is there to help in these times to provide financial relief for accepted third-party losses. These include medical bills as well as property and vehicle damage.

Am I permitted to cancel my car insurance policy after an accident and still file a claim?

You must have an active insurance policy in place on the day of the incident to file a claim. You can cancel the policy after that date and still receive the benefits of your coverage plan for the reported accident.

If you are more than 50% at fault, you and your insurance are responsible for paying out the third-party losses. Your policy type and coverage limits determine if a first-party claim qualifies for coverage:

  • Comprehensive coverage. Pays for repairs to your vehicle after a non-moving incident has occurred, including theft, flood loss, and an act of nature, such as a falling tree branch
  • Collision coverage. Pays for repairs or replacement of a vehicle damaged while driven
  • Uninsured/underinsured motorist protection. Pays for your medical care and bills when the at-fault party doesn’t have insurance
  • Medical payments. Pays for medical bills resulting from a vehicular accident

Understand the level of coverage you have, so there are no surprises.

When is it a good idea to cancel my auto insurance following an accident?

There are several reasons why you could choose to cancel your insurance after an accident. One of the most common is if you totaled your car and you don’t have another vehicle to drive at present. It doesn’t make sense to continue to pay to insure a vehicle that isn’t drivable.

Keep in mind that there is the possibility of penalization for a gap in coverage if you cancel immediately. You may want to wait until you receive confirmation of the settlement and you’ve signed the title over before you end your policy.

Poor customer service is another reason why many people cancel. If you have a bad experience with filing your claim or reaching a settlement, you may not want to continue to give the same company your business.

Even a minor accident can raise insurance rates and tempt you to cancel your existing policy. When you expect a higher bill, consider switching to another company instead. Ensure that you time everything correctly, so the new policy starts immediately when the old one ends.

What are the potential consequences of canceling my policy?

Although your existing claim isn’t affected, there are consequences for canceling your auto insurance after an accident. 

First, you must have active coverage if you still have a vehicle you intend to drive. Gaps in your insurance can result in a fine from the DMV and possibly the suspension of your license or vehicle registration. They also typically cause future rates to increase. In most cases, you must keep insurance on a totaled car until it’s signed over to the insurer. 

You may need to pay a fine if you cancel your policy without notice. Penalties for driving uninsured include fines, citations, and having your car impounded. Check the regulations in your state to understand exactly what rules apply and how to stay in compliance.

Free Car Insurance Comparison

Enter your ZIP code below to view companies that have cheap car insurance rates.

secured lock Secured with SHA-256 Encryption

Can my insurance company cancel my policy?

Under some circumstances, your insurance company may find a reason to cancel your policy. Acceptable reasons vary by state. 

In most cases, a company cannot cancel your coverage if you have had the policy for more than 60 days unless you fall into one of these categories:

  • You have not paid your bill
  • You have misrepresented information or committed fraud
  • Your driver’s license or registration was suspended
  • You have too many at-fault accidents or traffic violations
  • You’re medically unable to drive safely
  • Your vehicle is unsafe

Many companies choose to opt for non-renewal instead of cancellation unless the situation is severe. Your policy will expire after the current coverage period, and you must find a new insurer. The company will send a letter of cancellation or nonrenewal before your coverage ends, explaining the action and effective date.

It’s best to avoid having your insurer cancel, if at all possible. The information stays on your record for other companies to see and can lead to higher rates.

Minimum Coverage Requirements

The compensation and coverage you receive from a claim depend on your policy. Most states require that all drivers have liability insurance at a minimum. It’s illegal to drive without it. Liability coverage helps to pay for the expenses of the other party when you are at fault.

Driving without insurance is risky for several reasons. If caught, you could face legal consequences, such as expensive fines and penalties, including jail time. You are also responsible for paying for damages and medical bills from an at-fault accident out of your own pocket.

Final Thoughts on Canceling an Insurance Policy After an Accident

If you don’t wish to continue your coverage for any reason after involvement in a car accident, consider keeping your current policy in place until the finalization of your claim. This protects your driving record and lets you avoid potential consequences.

When you do decide to cancel your insurance, go about it in the right way. Wait until you sign over the title if you cancel completely because your car was totaled. Time the start date of a new policy correctly when you switch to another insurer. Avoid gaps in coverage and driving uninsured, as both have consequences.

Compare rates from several companies to find the best coverage at an affordable price whenever you need to change policies. Stay safe on the road, and protect yourself from legal and financial repercussions by maintaining active auto insurance.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.

A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

Full Bio →

Written by Laura Berry
Former Insurance Agent Laura Berry

Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

Full Bio →

Reviewed by Joel Ohman
Founder & CFP® Joel Ohman

Free Car Insurance Comparison

Enter your ZIP code below to view companies that have cheap car insurance rates.

secured lock Secured with SHA-256 Encryption