How To Stop an Insurance Policy From Being Canceled for Non-Payment

Take Action Immediately With These Tips

What to Do if You Get a Non-Payment Insurance Notice
What to do if you get a letter from your home or car insurance advising you that you will be canceled for non-payment. Credit: PhotoAlto/Sigrid Olsson / PhotoAlto Agency RF Collections / Getty Images.

How did this happen? You thought were doing great paying your premiums, and suddenly you get a letter, email or a call telling you that your policy will be canceled for non-payment.

Can An Insurance Company Cancel You For Non-Payment?

Maybe you’ve been a client for years; or maybe you’ve been paying monthly, how can they cancel?

Sometimes people forget the payment due date or have something come up that stopped them from taking care of business. There are many reasons why people might end up in a situation where their insurance policy is being canceled for non-payment.

Cancellation for non-payment is probably a lot more common than you think. The biggest mistake people make is ignoring the notifications, or not taking action soon enough. Once you find out it, you should contact your insurance company or representative immediately. This gives you the best chance of getting things resolved favorably.

An insurance company can and will cancel you for non-payment if you don't meet the terms and conditions of payment for your insurance policy.

How Do I Stop My Policy from Being Canceled for Non-Payment?

  • Get in touch with your insurance representative to negotiate a reinstatement and stop your policy from being canceled.
  • Ask them what you can do to keep your policy in force.
  • If you have specific reasons why you did not pay, like a stay in the hospital, illness or death in the family, a trip that took longer than expected, or maybe you hit some financial problems and are having trouble with debts, explain the circumstances to them and ask them to reconsider.

Very often if it is an exceptional circumstance and you have been a policyholder for a while, they might be able to negotiate new payment terms for you. In a worst-case scenario, be prepared to pay the full amount due before your policy gets canceled so that they may reinstate it. Insurance companies are usually willing to work something out if you tell them what is going on.

Never ignore notices regarding late payments or cancellations. It may seem overwhelming to deal with, but by having a conversation as soon as possible with your representative, you might be able to save your policy and avoid many hassles.

If I Don't Want A Policy, Can I Just Let It Get Canceled and Go Somewhere Else?

Many people think that the way to "not renew" policy is just not to pay. Always call the company to make sure what the procedure is to cancel and let them know your intention.

Never allow a policy to be canceled for non-payment just because you don't need the insurance anymore. Insurance companies may do soft-credit checks on your credit score and they also take into consideration if you have been canceled for non-payment before. This will impact your insurance credit rating and make it difficult for you to get affordable insurance.


There is a big difference between being canceled for non-payment and canceling a policy because you did not want it. 

Insurance is a contract and can only be canceled under very specific conditions. If you do not want to renew your insurance, then follow the right procedure to cancel so you don't get bad credit.

What to Do If You Insure Yourself Elsewhere But Get Cancelled for Non-Payment of Premium

Contact your insurer immediately and tell them about the fact that you did not pay because you did not want the policy. They may let you request a cancellation and stop the non-payment. In some circumstances, if you did insure yourself elsewhere, you might ask your new representative to help you out by sending proof of your new insurance to the old insurance representative, along with a note saying that the policy is "not required" and you have insured yourself elsewhere.


The proof of insurance you get from your new insurance company should allow you to resolve the issue if the policy term on both policies is the same.

In either of these cases, give them a call and get it resolved or it will be a negative on your insurance history and may stop you from getting insurance or qualifying for payment plans in the future.

When Would an Insurance Company Cancel Me for Non-Payment?

An insurance company provides you with the terms of a payment arrangement when you sign up for your policy. Within those terms, there are very specific guidelines that govern the financing agreement of your policy.

Any time you miss a payment on your agreement, whether it is because you forgot to mail it in, or you just lost track of the details, you put your policy at risk.

When payments bounce back to them as NSF or "account closed", this is another serious problem. Not only does it cost you a tremendous amount of money in fees from your bank, but the insurance company could add additional processing fees as well. If you miss one payment or get a Non-Sufficient Funds (NSF) charge, it does not automatically mean you will be canceled right away. Your payment arrangement agreement should outline the specific details of how this would be handled.

Many companies, for example, will allow forgiveness if you have one NSF payment, possibly two, but after repeated incidents, they usually reserve the right to cancel you for non-payment, regardless of how many payments have been made before the incident.

Top Way to Avoid Being Canceled for Non-Payment

Many companies offer really interesting and flexible payment options, for example, State Farm offers Apple Pay as one of their options. Most insurers offer bank withdrawals, credit card payments or online banking options. Some insurers offer payments via mobile apps. Find the insurer that works best for your lifestyle. The top way to avoid being canceled for non-payment is to communicate with your insurance representative and make payment arrangements.

Make sure you choose a payment plan, and payment frequency you can work with when you set up your new insurance policy and if it does not work for you when things change in your life, you can call the company and ask to take a new plan.

Can Your Insurance Company Help Make Payment Arrangements?

Communicate with the insurance company representative as soon as you think you might be running into trouble making your payments. Most of the time they will work with you to get your policy reinstated and put you back on track. Call them and try and make an arrangement, the consequences of being canceled for non-payment are serious in the insurance world, and you might have a hard time finding reasonably priced insurance after you have a cancellation on file. It could stay on your insurance record for several years.

Keep in mind, if you are having trouble paying your insurance, you are also going to have a very hard time paying for damages if you have a loss and your insurance is canceled. More than ever, when you are in financial difficulty, your insurance is the last thing you want to lose. Do whatever it takes to get things back on track, so you remain insured and protected.

Understanding Cancellation for Non-Payment of Policy Consequences

This article is a guideline to help you understand how cancellation for non-payment works with an insurance company. Since Insurance is regulated on a local level, every state and province will have different specifications. Also, every insurance company has different payment policies. Therefore, this information is to be used as a general guide to help you get things back on track, but in no way replaces the actual rules, regulations or limitations of your specific policy.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. New York State Department of Financial Services. "Re: Cancellation of Insurance Policy for Non-Payment of Premium Installment Fee, Late Payment Fee, and Reinstatement Fee Question Presented."

  2. National Association of Insurance Commissioners. "Improper Termination Model Practices Act." Page 3.

  3. NAIC. "A Consumer's Guide to Auto Insurance." Page 9-10.

  4. Equifax. "What Is a Credit Report and What Does It Include?"

  5. National Association of Insurance Commissioners. "Improper Termination Model Practices Act." Page 5.

  6. National Association of Insurance Commissioners. "NAIC Consumer Shopping Tool for Auto Insurance." Page 5.

  7. NAIC. "A Consumer's Guide to Auto Insurance." Page 2.

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