Car Insurance Nonrenewal and How it Differs from Cancellation
A car insurance nonrenewal occurs when your car insurance company decides not to renew your policy at the end of its term. A nonrenewal may be upsetting, and you'll almost certainly need to find new coverage, but your rates won't necessarily rise as a result.
Car insurance nonrenewal differs from having your insurance canceled in the middle of your policy, which is a more rare and serious problem.
What is car insurance nonrenewal? When can it happen to me?
Your provider may make changes to your insurance policy at the end of your car insurance contract. It can renew the policy as is, adjust the rates it charges for your coverage, or choose not to renew the contract at all.
If your company decides not to renew your policy, it must notify you in writing a certain number of days before your current policy expires. This is to allow you time to find a new insurer. The length of time varies by state. In New York, for example, it is between 45 and 60 days, whereas in Oregon, it is 30 days. In most cases, the written notice also includes a reason for nonrenewal, which is often required by law.
Why wasn't my car insurance renewed?
There are numerous reasons why a car insurance company may decide not to renew your policy. Most of the time, it considers you a riskier driver to insure than you were when you first purchased coverage. For example, you could have received a DUI or multiple minor moving violations, such as speeding tickets.
Common reasons for car insurance nonrenewal
- Multiple insurance claims, particularly for at-fault accidents
- Several tickets
- DUI or DWI
- Bought a new car
- You relocated, particularly across state lines.
It's possible that your insurance company will drop you at the end of your policy term for something positive, such as purchasing a new car. You can even be fired for no fault of your own. Car insurance companies are constantly adjusting their overall risk profile, and it is possible that your policy will not be renewed despite no changes in your circumstances.
For example, the insurer may have decided to discontinue selling insurance in your city or state entirely. There isn't much you can do about it except get another insurance quote.
Fortunately, there is no inherent penalty for not renewing your car insurance. You will not necessarily pay more at another company. If your insurer drops you for a serious offense, such as a DUI, you will almost certainly see a rate increase, regardless of which company insures you.
What to do if your car insurance is not renewed
If you receive a letter of nonrenewal from your insurance company, it will explain why it chose to cancel your policy. If you believe the nonrenewal was unjustified, you can usually contact your insurer for more information or to argue your case.
- Some states limit the reasons insurance companies can refuse to renew a policy. In New York, for example, insurance companies are not allowed to refuse you coverage because of your age — in other words, because you got older. If you believe your insurer's reason for nonrenewal is illegal, you can contact your state's insurance department for clarification and to file a complaint.
After being nonrenewed, you'll most likely need to find new coverage. Car insurance is almost universally required, and there is no grace period after nonrenewal. Your letter of nonrenewal will specify the date your current policy will expire, so it's critical that your new policy takes effect before that date. Otherwise, your insurance will have expired.
Check with several auto insurance companies to see who has the best rates. It's even possible that your new company will charge you less for coverage. Keep in mind that any changes to your driving history or coverage details, such as a recent accident or the addition of a new driver to the family, may have an impact on your car insurance rates.
If you've been involved in several incidents that make it more expensive to insure you, such as at-fault crashes, you may need to consider a nonstandard insurance policy. We recommend nonstandard insurance only as a last resort because nonstandard insurers typically charge higher premiums and provide poorer customer service than mainstream insurers. Rather than going with a nonstandard company right away, it's worth the extra effort to try to find a standard insurance company that will take you.
Car insurance nonrenewal vs. cancellation
Having your car insurance canceled is a much more serious issue than having it nonrenewed, and you may face penalties if you do. Many states limit the reasons an insurer can cancel a car insurance policy in the middle of the term — usually after the first 60 days of coverage. The following are common reasons for your insurance company to cancel your policy:
- Failure to pay for insurance coverage
- License suspension or revocation
- No vehicle registration
- Lying on your insurance application
- Fraudulent insurance claim
Whatever the reason for the cancellation, you should contact your insurance company right away to resolve the issue. You'll only have a few weeks to resolve the issue before your insurance coverage expires, which is much less time than you'll have after a nonrenewal.
In addition, unlike a nonrenewal, your new insurer is likely to penalize you if your previous insurance policy was canceled. If, on the other hand, the cancellation was the result of nonpayment, you may be able to reinstate coverage by paying your bill plus a late fee.