Non-Renewal and Your Car Insurance
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Getting a non-renewal notice from your auto insurer can feel like a bad breakup. There are a lot of questions: What does non-renewal mean? Is it bad? Did I do something wrong? We’ll help you figure this out and offer suggestions on how to proceed. Don’t worry.
What is a Non-Renewal?
First of all: Non-renewal, in the world of car insurance, means your car insurance company decided they do not wish to insure you anymore. That means once your current policy expires: that’s it. You can still get insurance elsewhere, but your current insurer is bowing out.
Most states require your insurance company to notify you in writing of their intent 45 days before the end of your policy. This lead time should give you plenty of time to shop around and find something new.
Why Do I Have a Non-Renewal Notice?
There are many reasons you might receive a notice of non-renewal from your insurer. Typically your insurer will notify you in a written letter that they do not intend to renew your policy and will include their reasons for doing so.
Some of the most common reasons include the following:
- Claims: Multiple at-fault accidents and claims can warrant a non-renewal of your car insurance policy
- Moving Out of State: Not all insurance companies operate in every state. So, changing your policy address to a state where your insurer does not offer coverage could cause your non-renewal.
- Driving Record: If you have a DUI, DWI, reckless driving offense, or several speeding violations, your insurer may choose to non-renew your policy, depending on their acceptance criteria
Give your insurer a call if you’ve received a non-renewal notice and disagree with their reasoning. Your insurance company may have sent it in error, there may be a problem with your file, or you might be able to convince them to give you another chance. Just remember that insurance companies in the US have to file their underwriting criteria with the state. That means they sometimes can’t give you another opportunity – it’s against their regulations—the ultimate rejection.
I’ve Received a Non-Renewal Notice. What Now?
Bummer. If there’s no going back and that insurer won’t issue you another policy, it’s time to start looking for a new insurer. You may have been paying too much with that company, or another company may offer you higher coverage for the same price—plenty more fish in the sea.
Whatever you decide, you better get researching straight away—even being without insurance for a brief period counts as a lapse in coverage. A lapse could cost you a lot of money on your car insurance, and you don’t need to start your coverage immediately.
You could set up your new coverage to take over when your current policy expires. If you’d rather get a new policy immediately, cancel your existing coverage after your new policy starts. You’re better off without them, right? Just keep in mind that you might have to pay an early cancellation fee and not receive a refund for any amounts you’ve paid in advance.
If you have received a non-renewal notice or think you may be about to receive one, Compare.com is here to help. We make it easy to compare car insurance policies side by side. That way, you can compare prices and coverage options to find the one that best suits your budget and needs.
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The Difference Between Car Insurance Non-Renewal and Cancellation
The difference between having your car insurance canceled by your insurance company and them choosing not to renew your policy may seem similar, but they’re quite different.
Having your policy canceled is far more severe. It looks worse to other companies when they look at your insurance history.
States understand the seriousness of having your auto insurance canceled in the middle of your policy, so they have regulations stating when companies can cancel your plan.
After the first 60 days of coverage, most can only cancel your policy for one of these reasons:
You Didn’t Pay Your Insurance Premium
To keep an active car insurance policy, you must pay your premium. Most insurance companies offer annual, bi-annual, quarterly, and monthly payment options. If you fail to make your payments on time, your insurance company will cancel your policy.
You Weren’t Honest on Your Application
When you apply for car insurance, you must complete an application to determine your eligibility. The type of insurance you qualify for and the rate you will pay are based on that determination. Suppose you misrepresented the facts to improve your chances of having your application approved or lowering your rate. In that case, the insurance company might cancel your policy if they find out.
You Committed Fraud
Insurance companies review every claim they receive to determine its validity. If there is a suspicion of fraud, they will initiate an investigation. If they decide the claim is fraudulent, there is a likelihood that your insurer will not cover the claim and cancel your insurance policy.
Your Driver’s License Has Been Suspended or Revoked
Being a licensed driver is one of the essential qualifications used to determine your eligibility for car insurance. If your driver’s license is suspended or revoked, you are no longer legally qualified to drive a motor vehicle. In this case, the insurance company has no choice but to terminate your policy.
Possible Reasons You’ll Receive a Notice of Nonrenewal
You might receive a non-renewal notice from your auto insurance company for many reasons. Here are scenarios when it’s common for this to occur.
You’ve Filed Multiple Insurance Claims
Many insurance companies choose to non-renewal your policy because you’re involved in actions that increase your liability and risk to the insurance company. Filing too many insurance claims (particularly for at-fault accidents) can lead to this.
You’ve Received Multiple Tickets
Whether it’s a speeding ticket, a ticket for following too close, or other moving violations, receiving too many is a red flag to insurance companies. While these incidents may not have led to an accident, they indicate that you’re headed in that direction. Insurance companies don’t want to cover drivers who don’t practice safe driving habits.
You’re Charged with a DUI or DWI
Getting a DUI or DWI is one of the most serious driving-related charges you can receive. This makes maintaining insurance more challenging and far more expensive. It’s a major red flag to insurance companies and a common reason your insurance can be non-renewed.
Moving, particularly across state lines, can lead to non-renewal. Auto insurance companies don’t offer coverage in every area, so if you move to a location where they no longer provide coverage, they have no choice but to non-renew your plan.
If the insurance company chooses to cancel your policy, it’s time to be proactive and get quotes from other car insurance companies. Instead of spending hours researching auto insurance companies individually, you can use our auto insurance comparison calculator and get rates from 65+ companies in minutes.
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Car Insurance Non-Renewal FAQs
What happens if you don’t renew your insurance
Not only does maintaining car insurance protect you and other drivers while you are on and off the road, but in most states, not having car insurance is against the law. If you do not renew your car insurance policy, the Department of Motor Vehicles will be notified. You could face fines and have your driver’s license and license plates suspended. In addition, you could be charged with a criminal offense
Is not renewing insurance the same as canceling?
There is a difference between an insurance non-renewal and cancellation. You or your insurance company may choose not to renew your insurance policy at the end of the term. In contrast, having your insurance canceled is usually due to you needing to meet your financial obligation to pay your insurance premium. Either way, you will need to purchase a new insurance policy.
What happens if my car insurance policy expires?
Driving without car insurance is risky and should be avoided. If your policy expires and you’re involved in an accident, get pulled over by the police, or receive a notification from DMV, you could face steep financial costs. In addition, it may be more difficult and expensive to purchase car insurance in the future.
Can your insurance policy be non-renewed at any time?
Yes, your insurance company has the right to non-renew your policy once your plan expires. Whatever their reason for ending coverage is, you want to ensure you have a new plan in place before your policy expires.
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