What’s the Difference Between Cancellation and 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. The affects on your future insurance companies is 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* Your driver’s license has been revoked or suspended.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 canceled, then you may be required to pay higher premiums elsewhere, or may even have trouble finding other coverage. Find out how companies are determining your rates. This could help you save a lot of time and money.

Source: autoinsuranceadvocate.net