If you're a North Carolina driver, your auto insurance can be canceled in one of three ways: you can legally opt to cancel the policy, choose non-renewal when the policy expires or the insurer may automatically terminate your policy. The rules for insurer-cancellation vary and are dependent on the type of insurance being canceled, such as state-mandated liability and uninsured motorist, or optional comprehensive and collision.
In North Carolina, there is no grace period for auto insurance payments. You must pay the full amount of your bill by the due date, even if you do not agree with the premium amount or any changes to the rate. Failure to submit your payment on time can lead to a canceled policy. To be on the safe side, make sure you have a record of the payment each time, such as a check copy or bank statement.
Legal Cancellation - Liability and Uninsured Motorist Protection Coverage
An auto insurance company may legally cancel your state-mandated liability or uninsured motorist policy for non-payment, if you move out of state and change your legal residency, your insurer changes its contract with your insurance agent or finance company, or if you misrepresented yourself in your original insurance application, including your driving record or the records of any member of your household. If the auto insurance company decides to terminate your policy because of an unpaid or late premium, they must give you 15 days notice in writing before canceling. If the insurer has any other reason for terminating, they must give you 60 days notice.
Legal Cancellation - Additional Coverage
Your auto insurer can legally cancel any additional insurance coverage -- such as comprehensive and collision -- for non-payment, frequent or costly claims, traffic violations or changes in your circumstance, such as an upgraded vehicle or new household member who does not meet the company guidelines. Legally, the insurer must notify you within 10 days if any additional coverage is terminated.
Personal Non-Renewal or Cancellation
You can legally cancel your auto insurance coverage at any time, but some insurers will charge a penalty for early termination. If you cancel before the policy has ended, your insurer will file a "short rate cancellation," which refunds you a pro-rated amount of your premium, minus any early cancellation penalty fees. Otherwise, you will receive a full refund in a pro-rata cancellation, which is a full refund.
If you feel that your auto insurance was illegally terminated, you can file a complaint with the North Carolina Department of Transportation, or NCDOT, by calling 919-715-7000 to set up a hearing.
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