Can a car insurance company raise premiums or cancel coverage midterm?

Most car insurance companies cannot raise premiums or cancel coverage midterm per state laws. Many car insurance companies offer short-term auto insurance for this reason, and a company can cancel your policy or raise your premiums once the term of your policy is complete. If your auto insurance provider recently raised your rates, start shopping for cheaper coverage with our free comparison tool below.

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Tonya Sisler has a Bachelor’s Degree from the University of South Carolina in Journalism and has worked for 15+ years in management. She has also completed a proofreading certification and is currently a professional writer.

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Brad Larson has been in the insurance industry for more than a dozen years. He started out as a claims adjuster for a national carrier. He has since switched to the agency side of the business. Brad is licensed in all P&C lines.

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Reviewed by Brad Larsen
Licensed Auto Insurance Agent Brad Larsen

UPDATED: Apr 15, 2022

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In a nutshell...

  • Your premiums are based on many factors, including risk
  • HIgh-risk drivers tend to pay more for car insurance than drivers with clean records
  • Thankfully, most drivers will never have to face a denial or cancellation in coverage

Car insurance premiums are primarily based on risk, but they are also affected by car insurance laws.

Most car insurance coverage is offered in 6-month terms (a handful of car insurers offer 12-month policies) and a common question asked by many drivers is why can I only buy a 6-month policy?

This action could mean increasing your rates, canceling your coverage or changing the terms of your policy. All of which are illegal in most states and the biggest reason why car insurance companies only offer short-term strategies.

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Do I have to get new car insurance every six months?

Most auto insurers opt to renew your policy and send you a new system in the mail.

Thankfully, most drivers will never experience any denial of coverage or a significant increase in rates, however, since car insurance companies are limited in how they can adjust for risk should an accident or other high-risk incidents, they limit their exposure to merely offering short-term policies.

Whenever you see an auto insurance renewal letter its also a good time to double check your policy for coverage and discounts and maybe even compare car insurance quotes before electing to insure with the same provider again.

There are often many benefits for staying with the same insurer such as customer loyalty discounts, but since your policy is ending soon, many drivers choose this window of time to compare car insurance quotes.

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Compare quotes from the top car insurance companies and save

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Why do car insurance rates change when a policy is renewed?

The risk model car insurance companies use ever-changing so anytime a policy is up for renewal drivers are subject to the current risk formula for calculating auto insurance premiums by that insurer.

While most drivers will only see a minimal change, it has been reported by some consumers that significant premium increases or decreases happened when their current car insurance policy came up for renewal.

Think of buying car insurance as locking in a rate for six months – with new standards to be based on current market rates at the time of renewal.

How do I know if I have the best car insurance rates?

iI’s imperative you make some car insurance quotes comparison to make sure your premiums are in-line with market rates.

Many drivers have never started a car insurance comparison search but instead, use the local insurance agent they always have.

While there is undoubtedly peace of mind in using a friendly face, it’s also the age of the internet where only a few moments can help provide a view of average car insurance rates for your profile.

Car insurance comparison will not always save you money, but it will re-enforce whether or not your current premiums are comparable to industry rates so engage the web today and compare auto insurance providers before renewing a policy.

Compare car insurance quotes today! Enter your zip code below to get started for FREE!



Compare Cheap Car Insurance Quotes

Compare quotes from the top car insurance companies and save

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