Auto Insurance: When Not To Renew Your Policy

Auto insurance non-renewal is when your car insurance company decides not to renew your policy at the end of its term. This could be because they consider you a riskier driver than when you initially purchased the insurance, or because of multiple insurance claims, a change of address, or a DUI or multiple driving violations. If you receive a letter of non-renewal, it will include the reason for the discontinuation of your policy. You can then contact your insurer for more information or to argue your case if you feel the non-renewal was unjustified.

Non-renewal is not the same as cancellation

While non-renewal and cancellation of an auto insurance policy have the same outcome—the end of that insurance policy—they are distinct processes with different implications.

Timing

Non-renewal occurs at the end of the policy’s term, whereas cancellation can occur mid-term or at the end of the term.

Reasons

Non-renewal can be initiated by either the insurance company or the customer. The insurance company may choose not to renew a policy because it no longer offers that type of coverage or no longer serves the customer's area. A customer may choose not to renew their policy if they want to switch providers or if their car is no longer running.

Cancellation, on the other hand, is usually initiated by the insurance company and is often due to the customer's failure to pay premiums, fraud or misrepresentation on their application, or a revoked or suspended driver's license.

Impact

Non-renewal does not necessarily mean that you will be charged a higher premium at another insurance company. However, cancellation is considered more serious and will likely result in higher premiums when purchasing a new policy.

Reasons for non-renewal

Auto insurance non-renewal occurs when your insurance company discontinues your policy at the end of its term. This can happen for a variety of reasons, and it's important to understand these reasons to ensure you can secure a new policy and avoid higher premiums. Here are some common reasons for non-renewal:

Company Decisions

In some cases, non-renewal may have nothing to do with you personally. Insurance companies may decide to stop offering a particular type of insurance or reduce the number of policies they sell in your area. They might also stop doing business in your state or city altogether. These decisions are beyond your control and are often based on the company's business strategy or risk assessment.

Late or Missed Payments

Failing to pay your premiums or making late payments is a common reason for non-renewal. Insurance companies rely on timely payments to manage their business, and consistent late or missed payments may lead them to decide not to renew your policy.

Multiple Moving Violations or Accidents

If you have multiple moving violations or at-fault accidents on your record, your insurance company may consider you a high-risk driver. As a result, they may choose not to renew your policy. This is especially true if you have received a DUI (Driving Under the Influence) conviction, which is a serious offence that significantly increases your risk profile.

Fraud or Misrepresentation

Insurance companies take fraud and misrepresentation very seriously. If you have made fraudulent claims, provided false information on your application, or failed to disclose necessary information, your insurer is likely to decide against renewing your policy.

Too Many Claims

Insurance companies may choose not to renew your policy if you file too many claims, especially if they are at-fault claims. This is because frequent claims increase the cost for the insurance company and indicate a higher level of risk associated with your policy.

Change of Address or Vehicle

Moving, especially across state lines, can be a reason for non-renewal. Insurance companies set rates and policies based on your location, and moving to a new state may impact their willingness to continue your coverage. Additionally, purchasing a new vehicle may also lead to non-renewal, as the insurance company will need to reassess the terms of your policy.

It's important to note that non-renewal does not necessarily mean you will face higher premiums at another insurance company. However, if the non-renewal is due to serious offences or violations, you may be considered a higher-risk driver, which could result in increased rates. In any case, it's crucial to find a new insurer promptly to avoid a lapse in coverage.

Reasons for cancellation

There are several reasons why an insurance provider may choose to cancel or not renew your auto insurance policy. Here are some common reasons for cancellation:

Common Reasons for Cancellation

• Failure to pay the premium on time.
• Not fully disclosing necessary information in your auto insurance application, such as your vehicle's garaging address or who drives your car regularly.
• Suspension or revocation of your driver's license or vehicle registration within the policy period or before the notice of cancellation.
• Making a fraudulent claim or providing false information to your insurance company.
• Having a medical condition, such as epilepsy or heart attacks, that affects your ability to drive safely.
• Conviction of a DUI, DWI, or OUI, which classifies you as a high-risk driver and increases your insurance rates.
• Using your car for business purposes, such as visiting job sites or making deliveries, without a commercial auto policy.
• Driving passengers for hire, such as for a rideshare company, without informing your insurer.

Common Reasons for Non-Renewal

In addition to the above, there are also reasons specific to non-renewal:

• Filing too many claims, especially if they are at-fault claims.
• Discontinuation of a particular insurance plan by the company.
• Reduction in the number of policies offered in your area.
• Moving out of state, which usually requires switching to a new car insurance policy.
• Driving behaviour and history, such as drunk driving or multiple moving violations, that lead the insurance company to determine you as a high-risk driver.

What to do if your auto insurance is not renewed

If your auto insurance is not renewed, the first thing to do is not panic. Non-renewal is not the same as cancellation—your policy will remain active until the end of its term, and you won't necessarily face higher rates at another company.

However, you will need to act promptly to ensure you get a new policy in place before your current one expires. Here are the steps to take:

• Contact your insurer: If you feel the non-renewal was unwarranted, get in touch with your insurance company to discuss your case. You can also ask for more information about the reason for non-renewal.
• Check your non-renewal notice: Your insurance company is legally required to notify you of the non-renewal within a certain time frame, which varies by state. This notice should include the specific reason for non-renewal and may include information about your right to appeal.
• Appeal the non-renewal: If you believe your company did not follow the required steps when cancelling your policy, you may be able to appeal the cancellation. Contact your state's insurance department for more information.
• Shop around for a new insurer: Check with multiple auto insurance companies to see which one can offer you the best rates and coverage. Remember that any changes to your driving history or circumstances may affect your rates.
• Consider a non-standard policy: If you have a poor driving record or other factors that make it more expensive to insure you, you may need to consider a non-standard insurance policy. However, be aware that non-standard insurers typically have higher prices and poorer customer service.
• Get your new policy in place: Ensure that your new policy takes effect before your current one expires. Driving without insurance is illegal in most states and can result in penalties and fines.

Remember, while non-renewal can be unexpected, it is not the end of the world. By following the steps above, you can make sure you stay insured and get the best rates possible.

What to do if your auto insurance is cancelled

If your auto insurance is cancelled, it's important to act quickly to avoid a lapse in coverage, which could result in higher premiums or difficulty in obtaining a new policy. Here are the steps you can take:

• Contact your insurer: Get in touch with your insurance provider to understand the reason for the cancellation and to clarify any misunderstandings. Ask if it's possible to reinstate your policy. Many companies offer a grace period, during which you can pay any missed premiums and fines to get your coverage back on track.
• Reach out to your state insurance department: If you believe the cancellation is unfair or unjustified, you can file a complaint with your state's insurance department. They may investigate and determine if you are protected from cancellation by state insurance laws.
• Consider a residual market plan: If you're having trouble getting a new policy due to being considered a high-risk driver, you can look into residual market plans. These are created when several insurance providers pool together to cover high-risk drivers.
• Shop for a new policy: If reinstatement is not an option, start comparing quotes and features from multiple insurance companies to find a suitable policy that meets your needs. Be sure to purchase coverage as soon as possible to avoid a lapse.
• Join your state's assigned-risk pool: As a last resort, you can turn to your state's assigned-risk pool. This ensures that even high-risk drivers can obtain the minimum insurance required to drive legally. However, expect to pay significantly more for this type of insurance.

Remember, if your policy is cancelled, it's important to take immediate action to avoid driving without insurance, which could lead to serious consequences such as losing your license or facing legal liability in the event of an accident.

Frequently asked questions