Can my Insurer Drop me After a Colorado Car Accident?

No. An insurer cannot cancel your insurance policy solely for being involved in a Colorado car accident. Both state law and the terms of your insurance contract set very clear limits on when and how a carrier can end your coverage. It is important to understand the difference between cancellation and non-renewal is important because the rules that apply to each are very different. The Colorado car accident Lawyers at Bowman Law prepared this article to help residents of Colorado understand their legal rights related to insurance coverage.

Cancelling an Insurance Policy Mid-Term in Colorado

Cancellation means ending a policy before its normal expiration date. In Colorado, as in most states, an insurance company may only cancel an insurance policy mid-term for specific reasons, including the following:

• Nonpayment of Premium: If you miss a payment, an insurance company can cancel your policy with at least 10 days’ notice. According to Drive Insured, when a policy is cancelled due to non-payment of premiums, insureds should expect a coverage lapse to trigger DMV reporting and potential registration issues because Colorado requires insurers to report new and canceled policies to the state’s Motorist Insurance Identification Database (MIIDB).
• Suspension or Revocation of a License: If your driver’s license is suspended or revoked during the term, an insurance company can cancel your policy with at least 10 days’ notice. Upon cancellation of a policy following license suspension, Colorado requires SR-22 insurance coverage before driving privileges can be reinstated. This requirement exists because Colorado wants proof the high-risk driver is continuously insured. Unlike standard policies, an SR-22 adds a layer of oversight: if the driver allows their policy to lapse, the insurance company must notify the state immediately, which can trigger a new suspension.
• Knowingly Making False Statement on an Insurance Application: Material misstatements about drivers, prior accidents, or use (like rideshare) can result in a policy cancellation. The company still must give the required notice and state the actual reasons.
• Knowingly and Willfully False Material Statement on a Claim: Submitting knowingly false material information in support of a claim can support cancellation and may expose you to civil and criminal consequences under Colorado’s fraud statute.

Importantly, simply being involved in a Colorado car accident does not give the insurance company the right to cancel your policy in the middle of its term.

Non-Renewal of an Insurance Policy in Colorado

Non-renewal, on the other hand, occurs when the insurance company decides not to continue coverage once the policy period ends. This is where your Colorado car accident history may be applicable. An insurer may decide a driver who has been in an accident presents too great a risk, and therefore choose not to renew coverage. If this happens, the insurance company must provide proper written notice—typically at least 30 days before the expiration date in Colorado—so that you have time to secure replacement coverage.

In Colorado, insurers cannot cancel a personal auto policy on a whim or in secret. Colorado State law limits when and how an insurance company may cancel a policy. If your insurance carrier drops you as an insured, it is important to understand whether the carrier acted pursuant to Colorado law.

60-Day “Underwriting” Window Exception

Colorado’s cancellation limits do not apply during the first 60 days a new insurance policy is in force. During that initial 60-day window, an insurance carrier may cancel under broader underwriting discretion, but it still must comply with notice rules and may not base the action on prohibited, discriminatory reasons. For these early cancellations, the rules require at least 10 days mailed or delivered notice.

Proper Notice of Cancelation

The content of a cancellation or non-renewal notice is just as important as the timing. The notice must include specific reasons for the insurer’s decision; vague references such as “accident record” or “poor claims history” are not sufficient. The notice must also state the effective date of cancellation or non-renewal, and, if the insurer offers continued coverage with an excluded driver endorsement, it must identify the excluded person and explain the premium that would apply if the insured accepts that option. Additionally, the notice must advise the insured of their right to seek coverage through the Colorado Assigned Risk Plan and inform them of their right to file a complaint with the Division of Insurance.

The method of delivery also matters. For non-renewals, proof of mailing to the address shown in the policy is sufficient proof that notice was given. Notices may also be sent by U.S. mail to the insured’s last known address at least 30 days before the effective date. Colorado law does allow insurers to send required notices electronically, but only if the insured has affirmatively consented to electronic delivery. Importantly, policyholders retain the right to withdraw that consent at any time.

If the carrier does not include the reason, you can demand it in writing and the company must provide it promptly.

Improper Insurance Policy Cancellations

When an insurance company fails to follow Colorado’s cancellation rules, it can open the door to a bad faith insurance claim. In Colorado, insurers owe their policyholders a duty of good faith and fair dealing. This means they must act honestly, comply with state law, and put the insured’s interests on equal footing with their own. If an insurer cancels a policy without providing the required notice, fails to state the true reason for cancellation, or invents a reason not permitted by statute, that conduct can be considered unreasonable and in bad faith.

Bad faith arises in two forms: common law bad faith and statutory bad faith. Common law bad faith focuses on whether the insurer acted unreasonably and with knowledge or reckless disregard of that unreasonableness. Statutory bad faith prohibits an insurer from unreasonably delaying or denying benefits owed under the policy. A wrongful cancellation that leaves a driver without coverage when they should have been protected can qualify as both.

The consequences for the insurance company can be serious. Under Colorado’s statutory bad faith law, an insurer who improperly cancels a policy and wrongfully denies coverage may be ordered to pay 2 times the covered benefit plus attorney’s fees and costs. Courts may also award punitive damages if the insurer’s conduct shows willful and wanton disregard for the rights of the insured.

Improper cancellation cases often arise in situations where an insurer attempts to terminate a policy mid-term after an accident without a legally valid reason, or where the insurer provides inadequate or late notice. Because Colorado law narrowly limits the grounds for cancellation and requires very specific notice procedures, carriers that fail to comply run a substantial risk of being held accountable in bad faith litigation.

For policyholders, understanding these protections is crucial. If you believe your policy was cancelled improperly, you may have the right not only to reinstatement of coverage, but also to pursue compensation for the financial and emotional harm caused by the insurer’s misconduct.

A Step-by-Step Guide if Your Policy was Cancelled or Renewed

1. Get the Notice of Cancellation: Request the notice and your underwriting file in writing. The notice must state clear, specific reasons.
2. Fix Nonpayment: If you issued a late payment, ask about reinstatement within the grace period the company offers (law requires at least 10 days’ cancellation notice; some carriers allow same-day reinstatement). Keep proof of payment.
3. Challenge Factual Errors: Dispute incorrect driver, garaging, or prior-loss data in writing with supporting documents.
4. Report Bad Behavior: If the carrier’s reasons are vague or its timing violates the statute, file a consumer complaint with the Colorado Division of Insurance and keep a copy for your records.
5. Avoid a Lapse: If replacement coverage proves hard to find, apply through the Colorado Automobile Insurance Plan (assigned risk) while you continue to contest the original action.
6. Preserve Your Claim: If the company uses cancellation to dodge an otherwise valid claim, speak with counsel immediately about statutory remedies for unreasonable delay/denial and potential bad faith.

Contact our Colorado Car Accident Lawyers

Colorado law gives insured drivers strong protections against abrupt or unclear policy cancellations. Insurers must follow strict timelines, provide clear and specific reasons, and send notices to the correct address. They must also inform drivers of their rights to replacement coverage and regulatory complaint processes. These safeguards ensure that drivers are not left without coverage unexpectedly and that they have the tools to respond if they disagree with the insurer’s decision.

If you believe your insurance company improperly cancelled your insurance policy, it would be helpful to speak with one of our Colorado car accident lawyers. At Bowman Law, we are dedicated to helping injured parties recover the compensation they deserve. If you or your loved one were in a car accident and have suffered impacts to your health, livelihood, and financial wellbeing, you deserve to be compensated and have your best interest protected against insurance companies’ tactics to offer less than you deserve. Contact the personal injury lawyers at Bowman Law to learn more about telehealth visits following an accident.  

We serve Denver, Boulder, Colorado Springs, and Fort Collins and the surrounding areas. We have opened new offices in Greeley and Wheat Ridge as well.