Receiving an auto policy cancellation letter in the mail can be an upsetting experience and leave you wondering what to do next. It can be equally confusing when an insurer sends you a car insurance non-renewal notification. In either scenario, you’ll soon be losing your car insurance coverage. Unless you can quickly work things out with your current insurer, you will need to obtain new coverage right away.
To better understand the difference between cancellation and non-renewal of your auto policy and why your carrier might choose this course of action, continue reading.
Reasons for an Auto Insurance Policy Cancellation
Auto policy cancellation is the termination of your coverage before its expiration date. According to the Insurance Information Institute (III), an insurer cannot terminate a policy that’s been in effect for more than 60 days unless the following conditions are true:
● You failed to pay your premiums
● You made a fraudulent claim
● Your auto insurance application has serious misrepresentations or doesn’t fully disclose the necessary information
● Your state revoked or suspended your driver’s license
Reasons for Car Insurance Nonrenewal
Auto insurance non-renewal takes effect after the expiration of your current policy. It either means your carrier no longer wants to cover you or any other driver on your policy or you’re deciding not to renew for your reasons.
If an insurer chooses not to renew your policy, they must notify you within a period stipulated by your state. They also have to explain their decision to you. Non-renewal doesn’t necessarily mean that you violated the terms of your policy. It could be that your insurer no longer offers that type of coverage or they’re now covering fewer drivers in your location. Non-renewal can also be necessary when you move out of state, which usually requires switching car insurance policies. These are valid reasons that don’t necessarily say anything bad about your claims record or past driving behavior.
Certain behavior and driving history can lead an insurance company to decide not to renew your policy. Insurance companies constantly assess risk and may choose not to renew if it is determined that you are too great of a risk. Past behavior, such as drunk driving, would be a valid cause for non-renewal. Too many moving violations or at-fault claims may also hurt your chances of getting your policy renewed.
What to Do upon Auto Policy Cancellation or Nonrenewal
When you’re facing an auto policy cancellation or non-renewal, you may reach out to your insurer and seek further clarification. If their decision is final and irreversible, you will need to engage another company for auto insurance coverage that meets your needs. A new policy with another carrier doesn’t have to cost you more than you’re used to paying. In fact, non-renewal or cancellation may allow you to shop around for discounts.
To learn more about auto insurance coverage, contact the experts at CF&P Insurance Brokers at (925) 956-7700. We’re happy to answer your questions and help you get the right coverage for your car insurance needs.