5 Differences Between Non-Renewal and Cancellation In Car Insurance
Non-renewal, and cancellation of car insurance may sound similar, but they are two distinct ideas in the insurance business.
Table of Contents
When you or your carrier choose to keep your vehicle insurance coverage, it is known as a renewal. When a carrier decides not to renew a policy at the conclusion of its term, this is known as insurance nonrenewal. Cancellation is a less common occurrence, but it occurs when an existing policy is cancelled by the carrier — or occasionally the policyholder — at some point during the coverage period.
Non-Renewal vs Cancellation of Car Insurance
Nonrenewal of automobile insurance can be initiated by either the insurance company or the policyholder. This occurs when one of the parties decides not to renew existing insurance as it reaches the end of its term. Nonrenewal can occur for a multitude of reasons, not all of which are related to the policyholder or the carrier. A carrier's requirements for insureds, for example, may have altered. A policy, on the other hand, can be terminated while it is still in effect. The insurance provider may require this, or the policyholder may choose to do so. The term "cancellation" refers to the act of cancelling insurance before its renewal deadline.
Non-Renewal of Car Insurance
Nonrenewal of insurance coverage can be voluntary on the part of the policyholder or compelled by the company. It's possible that a carrier's decision not to renew your policy isn't based on anything in your control.
- DUI or DWI Conviction: Policies differ per carrier, however, some will refuse to renew a policy if there has been a DUI or DWI conviction.
- Multiple Speeding Tickets: If you acquire too many speeding tickets in a short period of time, you may be regarded as too dangerous to insure.
- Multiple Claims or at-Fault Incidents: If you submit too many claims or are involved in too many accidents that are determined to be your fault, you become a greater risk for the carrier, which might result in nonrenewal.
- Non-Covered Location: If a policyholder moves to a new state where their existing insurance provider does not conduct business, they may need to locate a new insurer instead of renewing their policy. There are a number of local and regional suppliers who specialize in a certain area.
- Coverage that has been Discontinued: In some cases, the carrier may no longer provide the coverage that a policyholder requires. For instance, a provider might drop optional coverage like ridesharing insurance.
You will not necessarily pay higher premiums with another carrier if your contract is not renewed. Instead, it merely implies that you must analyze your alternatives in order to get the most advantageous coverage.
Cancellation of Car Insurance
When a policy is terminated before its renewal date, it is known as an auto insurance cancellation. While an insurance firm can terminate a policy, this is more likely to occur when a policyholder decides to do so.
- Moving Out of the Coverage Area: If you move before the end of a renewal term and your existing insurance provider does not provide coverage at your new address, you may need to cancel.
- You Don't have a Driver's License Anymore: Insurance may no longer be required if you no longer drive or own a vehicle. Instead of cancelling coverage as a temporary solution, insurance providers urge that drivers do so only if they do not expect to use their car in the near future.
- You Need to Transfer Carriers: After completing your own comparative shopping, you may find that canceling a current policy and switching to a new carrier and contract is more beneficial.
- If Your Car is Stolen: You must cancel your insurance if your automobile is taken and you do not have comprehensive coverage. You can file a claim if you have comprehensive coverage, and the insurance company will pay the IDV (Insured Declared Value).
- If Your Automobile is Really Old: If you no longer want to drive your car or intend to discard it, you should terminate your car insurance coverage.
A non-renewal or cancellation of your insurance coverage should not prevent you from acquiring a new policy. However, the cause for nonrenewal or cancellation, like a DUI conviction or too many speeding tickets, may make finding a new policy more difficult. Each carrier takes a risk-based choice, and it all boils down to the amount of danger the insurer believes you pose as a driver.
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.