You need your car to get to work, and you need insurance in order to drive. Getting dropped from your auto insurance company causes big problems. If it’s a financial issue – you didn’t pay the bill – that’s one thing. Getting dropped because of your behavior or sheer bad luck is another.

Cancellation Repercussions

It’s illegal to drive without liability insurance. Don’t even consider driving without coverage. If you get caught or get involved in an accident, you’re in serious trouble. If you’ve leased or financed your car, the lessor or lender requires you to have insurance. When the company receives notice of your cancellation, it could repossess the car if you don’t provide proof of new insurance within a short time.

Cancellation Reasons

Most state laws allow insurance companies to cancel insurance within the first two months of a new policy if they discover the applicant misrepresented information. After that period, insurance companies generally don’t cancel a policy – other than for nonpayment -- unless there’s a good reason. If you’ve been convicted of drunken driving or received numerous traffic citations, you might get dropped. One or two tickets for minor offenses usually won’t cause an insurance company to drop you, although your premiums could increase.

Premium Nonpayment

If the insurance company cancelled your coverage because you didn’t pay the bill, speak to your insurance agent about receiving reinstatement. Of course, that’s provided you can pay the premium and any fees associated with late or non-payments. Usually, your cancellation notice informs you that you have a certain amount of time, perhaps 30 days, in which to pay what is due. If you can’t afford the monthly payments on your current policy, ask your agent about raising your deductible so your premium payment goes down. If you own your car outright, consider dropping collision insurance, especially if the car has a low replacement value. If you financed your car, dropping collision coverage isn’t an option, as the bank financing your loan must protect its investment.

Assigned Risk Pool

If you can’t find coverage from an insurer, you’ll probably end up in your state’s assigned risk pool. An insurance company is basically forced to accept you, but it charges you for the privilege. The deal means higher premiums in exchange for less coverage, but if you can pay the bill you’ll be able to drive. Although you might eventually get out of the assigned risk category, expect to stay there for at least three years in most states.