It is the law. Every state requires that vehicle owners have a certain minimum amount of car insurance in order to operate their vehicles legally. Once the policy has been issued, you are protected from policy termination. It cannot be canceled except for the reasons that are specifically and clearly stated in the policy.
Policy termination is not an arbitrary decision but one that has serious immediate and long term effects on the policy holder. In most states the insurance industry is carefully regulated. Legal reasons for policy termination of one's car insurance are clearly defined and several of them are more or less uniform from state to state.. Car insurance policies are issued for a specified term of six months or less frequently one year. During the term of the policy it can be canceled only for the stated reasons. In some states a few limited types of insurance may not be canceled during the effective term of the policy. At the end of the term the insurance company can decide not to renew the policy for other reasons that are not specifically stated. The carrier must give the policy holder prior notice if the policy will not be renewed. 30 days is standard.
Any violation of your car insurance agreement is grounds for policy termination but there are three situations that are the most common causes. The first is failure to pay the premiums in full and on time. There is very little wiggle room here. Technically you are not covered if your premium is not received by the due date on your policy. Some exceptions allow you a week or 10 days to get current to prevent policy termination.
The second common reason for car insurance policy termination is the suspension or revocation of your driver's license for whatever reason. If you do not have a valid license you are driving illegally and the coverage on your car will not be in force. The insurance company has the option to formally terminate your coverage when the suspension occurs or to refuse to renew when the policy term expires.
Another common cause of car insurance policy termination is providing false or fraudulent information on your application. Any misleading or untrue statement regarding your personal information or the use of the vehicle including parking arrangements, etc. is grounds for immediate policy termination. You can be sure that the insurance company will find out and at the worst possible time.
There is no cause for concern that you policy will be terminated if you drive carefully and are honest with all information. The company wants to keep you insured and paying premiums.