Can a premium finance company cancel my car insurance in Texas if I miss a payment?

Can a premium finance company cancel car insurance in Texas?

The Texas Legislature says a premium finance company may not cancel an insurance contract listed in a premium finance agreement, except for the insured’s failure to make a payment at the time and in the amount provided in the agreement.¹ The Texas Legislature also says the company must mail written notice of cancellation for default. In that notice, the stated time to cure the default may not be earlier than a set day after the notice is mailed. The Insurance Code gives that period as 10 days minimum from mailing¹.¹ The Texas Legislature states the rule on cancellation this way:

An insurance premium finance company may not cancel an insurance contract listed in a premium finance agreement except as provided by this section for an insured's failure to make a payment at the time and in the amount provided in the agreement.

Does a Texas insurer cancel for non-payment under the same rule?

The Insurance Code has a separate rule for insurers. The Texas Legislature says an insurer may cancel a policy if the named insured does not pay any portion of the premium when due.² For that kind of cancellation, the Texas Legislature says it does not take effect until 10 days² after the insurer mails notice to the insured.²

What the sources do not state

The sources used here do not say what a financed policyholder must pay to cure a default, and they do not say what happens to coverage after the stated time passes. They also do not say how the insurer rule and the premium finance rule work together on one financed policy.

Next step

The Texas Legislature publishes the full text on its page for the premium finance chapter of the Insurance Code. The site also has a filing lookup tool.