Insurance 101
What Is The Difference
Between A Cancellations & A Non-Renewal
Cancellation and non-renewal
may seem like they have the same affect on you, but they are very different
things. Cancellation is when the insurance company stops a policy before the end
of its term. Non-renewal is when the company decides it will not allow you to
continue your policy to a new term.
Insurance companies are not allowed to cancel a
policy that has been in force for more than 60 days except:
- If you fail to pay the premium.
- You have committed fraud or made serious
misrepresentations on your application.
- Your driver's license has been revoked or
suspended.
Non-renewal is a different matter. Either you
or your insurance company can decide not to renew the policy when it expires.
Most states require that your insurance company give you a certain number of
days notice and explain the reason for non-renewal before it drops your policy.
If you think the reason is unfair or want a further explanation, call the
insurance company's consumer affairs division. If you don't get a satisfactory
explanation, call your state insurance department. There are regulations
restricting non-renewal reasons.
The company may have decided to drop that
particular line of insurance or to write fewer policies where you live, so you
shouldn't necessarily think the non-renewal is because of something you did. On
the other hand, if you did do something that raised the insurance company's risk
considerably, like driving drunk, the premium may rise and you may not have your
policy renewed.
If your insurance company did not renew your
policy, you will not necessarily be charged a higher premium at another
insurance company. If your policy was cancelled, then you may be required to pay
higher premiums elsewhere, or may even have trouble finding other coverage.
