Auto insurance is a must for staying on the road — and on the right side of the law. But having an auto policy isn’t only up to drivers. Insurance companies can (and sometimes do) decide not to cover a driver or drop the driver’s policy.

Not only is losing your auto coverage inconvenient, but also it can prevent you from getting behind the wheel. Most states, after all, require coverage on the road.

Let’s explore how to reduce the risk of having your auto policy canceled or not renewed. Plus, we’ll look at what steps to take if you do receive a dreaded cancellation notice.

Understand auto policy cancellation vs. nonrenewal

Going without auto coverage isn’t a safe — or legal — option. The Texas Department of Insurance (TDI) notes that repeated citations for driving without insurance¹ can lead to fines as high as $1,000 and to the suspension of your driver’s license.

At the same time, auto insurance protects you and your loved ones in the event of an accident.

But there are two common ways insurers can end auto coverage:

Policy cancellation happens in the middle of your coverage period. Despite the name, cancellation doesn’t always mean the insurer is ending all coverage — although it can mean just that. Cancellation² can also mean a reduction in your coverage or a refusal by the insurer to “provide additional coverage to which you are entitled under the policy,” according to TDI.

Policy nonrenewal happens when your coverage period ends, and your insurer refuses to renew your policy. Sometimes nonrenewals happen for reasons that have nothing to with your actions, such as when an insurer decides to leave a market³ or stop writing specific kinds of policies. However, insurers are also more likely not to renew if you’ve filed several claims within a short timeframe or exhibited other evidence of increased risk.

Smart actions to avoid cancellation

In Texas, insurers can only cancel a policy that’s been in effect for 60 days or longer if it meets certain requirements,⁴ including nonpayment, fraud and suspension or loss of your — or a household member’s — driver’s license.

To help avoid this situation, pay your premiums on time and stick to the facts when you file claims. Yes, your insurer can cancel your coverage if they find evidence of fraud in a claim.

Your policy can also be canceled if anyone on your policy has their license suspended or revoked. This can happen for several reasons — and they’re not all related to driving.

• Pay your traffic tickets and show up for court dates. The Texas Department of Public Safety may not renew⁵ your license if you owe traffic fines or miss court appointments.
• Make child support payments on time. Parents who are late on child support payments risk having their license revoked.⁶
• Don’t drink — or drug — and drive. If you’re stopped for suspicion of driving (or boating under the influence), refusing a field sobriety test can result in an immediate suspension⁷ of your driver’s license.
• Go to class (or make sure your teenager does). Texas teenagers declared truant⁸ can lose their license for 180 days or until the end of the current school year — whichever is longer.

Take these steps to reduce nonrenewal risk

As mentioned before, sometimes nonrenewal isn’t related to your actions. But it can be, so here are some tips to help you keep your coverage.

• Drive safely — and expect the same from every driver on your policy. “Doing something to considerably raise the insurance company’s risk”⁹ can lead to nonrenewal, according to the Insurance Information Institute. Drunk or reckless driving — or causing a serious accident — could cause your insurer to decide you’re too risky to insure.
• Protect your car from theft. If you have comprehensive coverage, you’re covered in case your car is stolen. But you run the risk of losing your coverage if it keeps happening to you — even though car thieves are to blame. In Texas, insurers have the right not to renew your policy if you have two or more claims in a year that are not your fault¹⁰ (with some exceptions, see below).
• Park your vehicle in a garage or in the safest location you can access, when possible. Always lock your vehicle and remove or hide valuables. Devices that disable or track your vehicle in case of theft can deter thieves — and may qualify you for a premium discount.

Know your rights

According to TDI, insurers are required to give you at least 10 days’ notice¹¹ before canceling your policy. If you’ve had your policy for more than 60 days, they can only cancel it for nonpayment, fraud and driver’s license suspension or revocation — or if the policy itself violates Texas insurance laws.

For nonrenewal, you must receive notice at least 30 days before your coverage is scheduled to end. Insurers in Texas can’t refuse to renew your policy for the following reasons:

• Marriage or divorce: If your marital status changes, you’re entitled to continued coverage.
• Age: Age can’t be the sole reason for nonrenewal.
• Credit history: Like age, your credit can’t be the only reason your insurer refuses to renew your policy.

Some specific types of auto insurance claims are also banned from being the sole reason for a nonrenewal. These include:

• Hail, wind and flood damage
• Not-at-fault collisions with animals
• Damage from flying debris
• Towing and labor

» Tip: If your policy is canceled or not renewed, you have the right to request an explanation¹² in writing from your insurer.

The takeaway

While the possibility of having your auto insurance canceled or nonrenewed can be daunting, RBFCU Insurance Agency is here to help. Our knowledgeable, licensed insurance agents work with multiple carriers and can discuss potential options with you. We offer a one-stop shopping experience to help you find the right auto coverage for your needs and budget — all with the same high level of customer service that RBFCU proudly provides. We’re happy to conduct a review of your policy, or you can request an online quote* today.