Arizona Car Insurance Cancellation Rules: Reasons, Notices and the 10-Day Objection

Allowed reasons to cancel after 60 days

After the first 60 days of a new policy, or at any time on a renewal policy, an insurer may cancel only if:

1. You fail to pay the premium or an installment when due.
2. The insurance was obtained through fraudulent misrepresentation.
3. You, a household member who customarily drives an insured car, or another regular driver has a driver license suspended or revoked during the policy period.
4. One of those drivers develops a permanent physical or mental disability and cannot produce a certificate from a physician or registered nurse practitioner confirming the ability to drive.
5. One of those drivers is convicted, within the 36 months before the policy's effective date or during the policy period, of criminal negligence, homicide or assault arising from driving; driving while intoxicated or under the influence of drugs; leaving the scene of an accident; making false statements on a license application; or reckless driving.
6. The insurer is placed in rehabilitation or receivership, or its certificate of authority is suspended for financial condition.
7. A car rated as private passenger is used regularly and frequently for commercial purposes, or for rideshare driving without an endorsement or other policy covering it.
8. The Director determines that continuing the policy would violate Arizona law or jeopardize the insurer's solvency.

Source: A.R.S. § 20-1631(D). During the first 60 days of a brand-new policy these limits do not apply (§ 20-1631(G)).

Notice periods and grace period

Nonrenewal: what insurers may not consider

An insurer may nonrenew for any reason other than your location of residence, age, race, color, religion, sex, national origin or ancestry (A.R.S. § 20-1631(C)). It may also nonrenew if the named insured establishes a primary residence in another state. For non-payment cancellations, § 20-1632.01 adds sexual orientation, marital status and driving record to the list of reasons that may not be used.

Objecting to the Director within ten days

If you believe a cancellation or nonrenewal is arbitrary, capricious or otherwise unlawful, or that the notice or reasons were not given properly, you may file a written objection with the Director within ten days after receiving the notice (A.R.S. § 20-1633). The insurer then has ten days to respond, and the Director must approve or disapprove the insurer's action within fifteen days of receiving your objection. If a nonrenewal violated the law, the Director orders the policy reinstated retroactively.

DIFI's address for objections is Department of Insurance, 100 N 15th Ave #261, Phoenix, AZ 85007-2624. For general service complaints, DIFI suggests first trying your agent, then filing with its Consumer Protection Division at difi.az.gov/file-complaint.

If no insurer will cover you

Notices of cancellation or nonrenewal for reasons other than non-payment must mention your possible eligibility for the assigned risk plan. If no insurer will write you, you can apply through the Arizona Automobile Insurance Plan, administered by AIPSO, through any licensed property and casualty agent. See AIPSO's Arizona plan page. Coverage there is usually more expensive, so keep shopping the voluntary market as your record improves. Avoid a gap: ADOT is notified of cancellations automatically, and driving uninsured can suspend your registration and license.