Car Insurance Cancellation Laws

Reasons car insurance policies can be canceled mid-term

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Penalties for Driving Without Insurance in South Carolina

According to the South Carolina Department of Motor Vehicles, when you cancel the car insurance policy on a vehicle you’re still driving, you’ll probably receive a letter requiring your insurance company to electronically verify that you’ve got new coverage, and then let the SCDMV know. If the SCDMV does not receive this verification within 20 days:

  • your driving privileges and vehicle plates and registration will be suspended, and
  • you may be ordered to pay up to $400 to reinstate your driving privileges and registration.

If you’re pulled over and cited for driving without insurance, and it’s a vehicle you don’t own, your license will probably be suspended for 30 days, and you’ll likely need to pay a $100 reinstatement fee.

If you’re pulled over and cited for driving without insurance, and you’re the vehicle owner, your license and registration will almost certainly be suspended until the SCDMV receives a $550 “uninsured motorist fee,” and you’ll probably need to make sure your car insurance company verifies your insured status with SCDMV for the next three years.

Keep in mind that fines and other administrative penalties will likely pale in comparison to the financial hit you could take if you’re in a car accident and you don’t have car insurance.

How Do I Find Out If My Car Insurance is Canceled?

A car insurance company is required to give you advance notification of cancellation, typically sent by mail or electronic delivery.

The time frame for advance notice varies by state and the reason the policy is being canceled:

  • Cancellation for nonpayment typically requires 10 days notice of cancellation. 
  • A notice of cancellation for other reasons, like a driver’s license suspension, can generally range from 20 to 45 days, depending on the state.

If you receive a cancellation notice, you’ll want to deal with it immediately. If you think the insurer has misinformation, or the reason is a late payment, ask if you can resolve the issue before cancellation.

If you think the cancellation of your car insurance policy is unfair or unlawful, and you can’t resolve it with the insurance company, you can contact your state department of insurance. State departments of insurance are the official takers of complaints against insurers, not the Better Business Bureau (BBB) or other organizations. And if a department of insurance sees a pattern of unfair cancellations, it could take enforcement actions against the insurer, such as fines.

What Happens If I Get Caught Driving Without Car Insurance?

Driving without car insurance can have both legal and financial consequences. That’s because every state has some form of “financial responsibility” law, which basically means that you must show you can pay for others’ medical bills and property damage if you cause a car accident. Most folks satisfy this requirement by purchasing auto liability insurance.

Here are two ways that driving uninsured could cause serious financial and legal pain.

Causing an Accident Without Car Insurance

If you cause a car accident while driving without insurance, you could be hit hard by out-of-pocket expenses to pay for others’ medical bills and car repairs. For context, the average nationwide cost of a bodily injury claim is more than $20,000 and the average property damage liability claim is about $4,200, according to the most recent data from the National Association of Insurance Commissioners.

People who drive without insurance end up costing everyone else. Because an uninsured driver may not have funds to pay a legal judgment, other drivers protect themselves by purchasing uninsured motorist coverage in case they’re hit by an uninsured driver.

Getting Caught Driving Uninsured

Many states have sought to crack down on uninsured drivers with legal ramifications. If you get pulled over and cannot show proof of insurance, you could be hit with fines, penalties and even jail time.

Here’s a look at examples of consequences for driving without car insurance.

State Fine (first offense) Other potential consequences

California

$100-$200

Impoundment of your vehicle

Florida

$150 reinstatement fee

License and car registration suspension

New Jersey

$300-$1,000

Loss of your driver’s license for one year community service

New York

$150-$1,500

Jail for up to 15 days

Texas

$175-$350

$250 surcharge on your license for three years

How to Legally Drop the Insurance Coverage on a Vehicle

The only way to legally drop the insurance coverage on a vehicle you still own in the state of SC is to turn in the SC license plate to the DMV then cancel the auto coverage that same day.

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