Understanding Your Options After Non-Renewal Of Auto Insurance

Car insurance non-renewal is when your insurance company decides not to renew your policy at the end of its term. This can happen for a variety of reasons, including moving, getting a DUI, or simply because the insurance company is reducing its number of customers in your area. While non-renewal is different from cancellation—which can happen mid-policy and is often due to more serious issues—it can still be challenging to get a new policy after non-renewal, and you may face higher premiums. However, non-renewal is not always due to negative reasons and does not necessarily result in higher rates. If you receive a non-renewal notice, it's important to act quickly to find a new insurer and avoid a lapse in coverage.

Understand the differences between non-renewal and cancellation

Car insurance non-renewal and cancellation are two distinct scenarios that can occur with your policy. Here's an overview of the key differences between the two:

Non-Renewal:

• Non-renewal occurs when your insurance company decides not to renew your policy at the end of its term. This means that your policy will not be extended or renewed for another term.
• Non-renewal can happen through no fault of your own. For example, the insurer may decide to reduce its number of customers in your area or stop selling policies in your state.
• In some states, insurance companies are required to notify you in advance of non-renewal, usually within a specific timeframe before the policy's expiration date. They may also need to explain the reasons for non-renewal.
• Non-renewal does not directly affect the policy premium of the next policy cycle, and you will not necessarily be charged a higher premium at another insurance company.
• Common reasons for non-renewal include changes in the insured's risk profile, increased claims or losses, or shifts in the insurer's business strategies.

Cancellation:

• Cancellation refers to the termination of your insurance policy before the end of its term. It can happen at any time during the policy period.
• Cancellation is typically a result of policy violations or non-compliance by the policyholder, such as non-payment of premiums, a history of unsafe driving, suspension of your driver's license, or fraudulent claims.
• Cancellation is considered more serious than non-renewal and may make finding a new insurance policy more difficult and expensive.
• If your policy is cancelled, you will likely pay higher car insurance rates at your next insurer.
• Insurance companies usually cannot cancel a policy that has been in force for more than 60 days, except for specific reasons such as non-payment, fraud, or suspension of your driver's license.

In both cases, it is important to take proactive steps to secure continued coverage and protect yourself from legal and financial risks associated with driving without insurance. Understanding the differences between non-renewal and cancellation can help you navigate these situations effectively and ensure you maintain the coverage you need.

Research and compare quotes from multiple insurance companies

If your car insurance company decides not to renew your policy, you will need to get coverage from another insurer. This can be a daunting task, but there are several steps you can take to ensure you find the best deal. One of the most important things you can do is to research and compare quotes from multiple insurance companies. Here are some tips on how to do this effectively:

• Decide on the coverage you need: Consider your state's minimum coverage requirements, as well as your car's mileage and features, which may mean you need additional coverage. It's usually a good idea to get a full-coverage policy.
• Gather your personal information: To get accurate quotes, you'll need to provide some basic personal information, such as your driver's license number, info about other drivers on the policy, your current insurance company, your car's make and model, and its vehicle identification number (VIN).
• Know your driving history: Be prepared to provide information about any recent tickets or accidents, as this will impact your quotes.
• Use comparison tools: Utilize online auto insurance quote comparison tools or work with an independent insurance agent who can help you compare multiple quotes at once.
• Get quotes from multiple companies: Compare quotes from at least three companies, if not more. This will help you find the best rate and ensure you're getting the coverage you need.
• Compare the same coverage amounts: When collecting quotes, make sure you are comparing the same types and levels of coverage across companies to ensure an accurate comparison.
• Consider discounts: Different insurers offer different discounts, so be sure to ask about any discounts you may be eligible for, such as good driver discounts, bundling discounts, or safe driver discounts.
• Act quickly: If your current policy is not being renewed, you'll want to make sure you have a new policy in place before the old one expires to avoid a lapse in coverage, which can result in higher rates and penalties.

Determine sufficient coverage

Determining sufficient coverage is an important step in getting auto insurance after non-renewal. Here are some key points to consider:

• Liability insurance: This is mandatory in most states and covers injury to other people or damage to their property. The recommended coverage amount is $100,000 per person for bodily injury liability, $300,000 per accident, and $100,000 for property damage. However, the minimum coverage requirements vary by state, so be sure to check your state's requirements.
• Uninsured or underinsured motorist coverage: This protects you if you're in an accident with a driver who has no or inadequate insurance. It is required in some states, and the recommended coverage amount is to match your liability coverage.
• Personal injury protection (PIP): PIP covers your medical bills, lost wages, and other expenses after an accident, regardless of who is at fault. It is required in some states, and the recommended coverage amount is enough to cover your health insurance deductible.
• Collision insurance: This covers damage to your vehicle in the event of an accident. It is typically required if your car is leased or financed. The recommended coverage amount is the cash value of your car, and you can choose a deductible that fits your budget.
• Comprehensive insurance: This covers non-collision damage to your vehicle, such as theft or natural disasters. Like collision insurance, it is usually required for leased or financed vehicles. The recommended coverage amount is the cash value of your car, and you can choose a deductible.
• Other optional coverages: Depending on your needs, you may want to consider additional coverages such as rental car reimbursement, roadside assistance, or ride-share driver coverage.

Remember, it is important to buy enough coverage to protect yourself financially in the event of an accident. While you want to stay within your budget, skimping on coverage could leave you underinsured when you need it most.

Contact your state's insurance department if you believe your policy was cancelled unfairly

If you believe your auto insurance policy was cancelled unfairly, you can contact your state's insurance department. This is the course of action to take if you think your insurer is treating you unfairly.

Your state's insurance department might investigate to see if the cancellation was justified. If the cancellation was illegal, you can file a complaint through the department.

State laws dictate when insurance companies can cancel coverage. Reasons for cancellation typically involve problems with the customer, including:

• Revocation or suspension of a driver's license
• Lack of vehicle registration
• Fraud, such as lying or unintentionally giving incorrect information on the insurance application about things that would have affected the policy price
• Making a fraudulent claim

Cancellation laws vary by state, so it's worth checking the specific laws in your state.

Consider a non-standard or residual market insurance plan

If you've been non-renewed, you may need to consider a non-standard insurance policy. This is a last resort option for those who have been involved in several incidents that make them more expensive to insure, such as at-fault crashes. Non-standard insurance policies are typically more expensive and have more poorly rated customer service than mainstream policies.

Non-standard insurance policies are offered by a variety of different programs that provide insurance to high-risk policyholders who may have difficulty obtaining coverage from the standard market. These are known as residual market insurance plans, and they serve as a coverage source of last resort for individuals who have been rejected by voluntary market insurers. Residual markets require insurers writing specific coverage lines in a given state to assume the profits or losses accruing from insuring that state's residual risks in proportion to their share of the total voluntary market premiums written in that state.

Residual market insurance plans are most often used for workers' compensation, personal automobile liability, and property insurance. In the US, there are several programs in place that provide this type of insurance, including Fair Access to Insurance Requirements (FAIR) Plans, Beach and Windstorm Plans, and two state-run insurance companies in Florida and Louisiana: Florida Citizens Property Insurance Corp. (CPIC) and Louisiana Citizens Property Insurance Corp. (Louisiana Citizens). FAIR Plans, established in the 1960s to ensure the continued provision of insurance in urban areas, often provide property insurance in both urban and coastal areas, while Beach and Windstorm Plans cover predominantly wind-only risks in designated coastal areas. Hybrid plans, like those in Florida and Louisiana, provide property insurance throughout those states.

Frequently asked questions