Car insurance nonrenewal and cancellation may sound similar, but these are two different concepts in the insurance world. Car insurance renewal is when you, or your carrier, choose to continue auto insurance coverage. Insurance nonrenewal typically occurs when the carrier decides not to renew a policy at the end of its term. Cancellation is a less common event, but this is when the carrier — or sometimes the policyholder — cancels a current policy at some point during the coverage period.
If you receive an insurance nonrenewal notice or your policy gets canceled, you do have options. But first understanding what each of these means for your current insurance coverage will help you navigate through these scenarios.
Car insurance nonrenewal vs. cancellation
Car insurance nonrenewal is an action that can be taken by either the insurance carrier or the policyholder. This is when one of the parties decides not to renew a current policy at its expiration date. Nonrenewal could be for a variety of reasons and not necessarily because the policyholder or the carrier has done anything wrong. For example, a carrier’s criteria for insureds may have changed.
On the other hand, a policy can be canceled while it is still active. This can be forced by the insurance company or could also be a policyholder’s choice. Cancellation refers to canceling the policy prior to the renewal date.
Car insurance nonrenewal
Insurance nonrenewal can be a choice from the policyholder or a forced action by the carrier. When a carrier chooses not to renew your policy, it may not be based on anything within your control.
Reasons for nonrenewal related to driving record:
- Conviction of a DUI or DWI: Policies vary from one carrier to another, but some will choose not to renew a policy if there is a DUI or DWI conviction.
- Multiple speeding tickets: If you receive too many speeding tickets over a certain period of time, you may be deemed too high of a risk to continue insuring.
- Multiple claims or at-fault accidents: If you have filed too many claims or been involved in too many accidents ruled your fault, you become a higher risk for the carrier, which may be another reason for nonrenewal.
Other reasons for nonrenewal:
- Non-covered location: If the policyholder moves to a new state where their current insurance carrier does not operate, then they might find a new carrier rather than renewing their policy. There are numerous local and regional providers that only service a specific area.
- Discontinued coverage: There may be a situation where the carrier no longer offers a certain type of coverage a policyholder needs. For example, if a carrier may discontinue optional coverage such as rideshare insurance.
Whether the carrier or the policyholder is the one who chooses not to renew a policy, either could be a positive situation. When it is time to find a new policy, comparison shopping and reviewing the numerous insurance choices available is often an effective way to save money on premiums. A nonrenewal does not necessarily mean you will pay higher premiums with another carrier. Instead, it simply means you will need to weigh your options to find the most beneficial coverage.
Car insurance cancellation
A car insurance cancellation is when the policy is canceled before the renewal date. While an insurance carrier can cancel a policy, this scenario is more likely to happen when a policyholder chooses to cancel.
Like a nonrenewal, there are a range of reasons a policy may be canceled. Many surround changes in a driver’s circumstance:
- Moving out of the coverage area: If you are moving before the end of a renewal period and your current insurance provider does not offer coverage at your new address, then you may need to cancel.
- You no longer drive a vehicle: If you no longer drive or have a vehicle, then insurance may no longer be necessary. Insurance agents recommend that drivers only do this if they do not plan to drive their vehicle at any near point in the future, rather than canceling coverage as a temporary solution.
- You need to switch carriers: After conducting your own comparison research, you may find it more beneficial to cancel a current policy and go with an entirely new carrier and contract.
It is important to act quickly once you receive an insurance nonrenewal notice or cancellation. You will be given a date of when the coverage stops. Keep in mind that it is legally required for you to maintain the state minimum required coverage at all times. To avoid a lapse in coverage, be sure to obtain a new insurance policy with an effective date before the nonrenewal or cancellation date.
Can car insurance be cancelled at any time?
An insurance carrier cannot cancel a policy after the policy has been in force for 60 days. However, there are exceptions to this. Car insurance may be canceled at any time if:
- Premiums are unpaid
- A driver lies or misrepresents information on the insurance application
- A driver’s license has been suspended or revoked
If you receive a nonrenewal or cancellation notice from the carrier and you feel the decision is not warranted, you have the right to contact the insurance carrier. You can usually speak to someone in the consumer affairs division for help. If this does not provide satisfactory information, contacting your state’s insurance division is another option.
Can you get insurance after a non-renewed or cancellation?
An insurance nonrenewal or cancellation should not keep you from obtaining a new policy. However, the reason behind a nonrenewal or cancellation may make it more challenging for you to secure a new policy, such as a DUI conviction or too many speeding tickets. Each carrier makes a decision based on risk and it all comes down to how much risk the insurer determines you carry as a driver.