Auto Insurance Non-Renewal: What You Need To Know

Auto insurance companies can choose not to renew a policy at the end of its term, and they must notify customers within a certain time frame, which varies by state. This is known as a non-renewal, and it differs from a cancellation, which can occur mid-policy. Non-renewals can happen for various reasons, such as the insurance company reducing its number of customers in a specific area or the insured being considered a riskier driver than when they initially purchased the policy. When a non-renewal occurs, it's important to find a new insurer promptly to avoid a lapse in coverage, as car insurance is required in most states.

Reasons for non-renewal

There are a number of reasons why an insurance company may choose not to renew your policy. Non-renewal occurs when the insurance company decides not to continue coverage when the policy expires. Here are some common reasons for non-renewal:

• Your insurance company decides to cease business in your state or sell fewer policies.
• Late car insurance payments.
• False or fraudulent information on your insurance application.
• Multiple moving violations or car accidents.
• Multiple insurance claims, especially for at-fault crashes.
• You moved, especially across state lines.
• You bought a new car.
• The insured vehicle has changed in shape or condition during the policy period, increasing the risk of insuring it.
• The insured vehicle is used in the business of transporting flammables or explosives.
• The insured vehicle is an authorized emergency vehicle.
• The insured vehicle is mechanically defective and driving it might endanger others.
• The insured vehicle is subject to an inspection law and it has not been inspected or has not passed inspections.
• Anyone covered under the policy has a criminal conviction record, traffic conviction record, physical condition, or mental condition that might endanger others.
• Anyone covered under the policy has, within the preceding 36 months, been convicted of criminal negligence resulting in death, homicide arising out of operating a motor vehicle, assault arising out of operating a motor vehicle, operating a motor vehicle while intoxicated, or other similar offences.
• Anyone covered under the policy has, within the preceding 36 months, forfeited bail for criminal negligence resulting in death, homicide arising out of operating a motor vehicle, assault arising out of operating a motor vehicle, operating a motor vehicle while intoxicated, or other similar offences.
• Anyone covered under the policy has, within the preceding 12 months, had their driver's license suspended or revoked.
• Anyone covered under the policy has, within the preceding 12 months, been convicted of three or more speeding violations or misdemeanour motor vehicle violations.
• Anyone covered under the policy has, within the preceding 12 months, forfeited bail for three or more speeding violations or misdemeanour motor vehicle violations.

Non-renewal vs cancellation

Cancellation and non-renewal of car insurance policies have the same outcome: the end of that insurance policy. However, there are some key differences between the two.

Cancellation

Cancellation can occur mid-term or when the policy term is ending. Insurance companies typically can't cancel a policy that has been in force for 60 days or more unless specific reasons are given, such as:

• Failure to pay the premium
• Committing fraud or making serious misrepresentations on the application
• Having a revoked or suspended driver's license

Non-renewal

Non-renewal happens when either the insured or the insurance company decides not to renew the policy once it reaches its expiration date. The insurance company must give a certain number of days' notice and explain the reason for non-renewal before dropping the policy. Reasons for non-renewal include:

• The insured wants to switch auto insurance providers or save money
• The company has dropped coverage or no longer serves the area
• The insured has a DUI conviction and requires an SR-22, legal proof of insurance
• The insured has multiple moving violations or caused car accidents

Notice of cancellation or non-renewal

Insurance companies are legally required to inform customers of cancellations and non-renewals within a certain time period, as dictated by the state. For example, New York requires at least a 45- to 60-day notice before the expiration date, along with reasons for non-renewal.

What to do if your insurance is not renewed

If your insurance company decides not to renew your policy, it can be a jarring experience. However, it's important to note that non-renewal is different from policy cancellation, which occurs when a company terminates your policy before the expiration date. In the case of non-renewal, here are some steps you can take:

• Review the non-renewal notice: Insurance companies are required by law to notify you in writing about their decision not to renew your policy. This notice should include the specific reasons for non-renewal and the effective date of the non-renewal. Make sure to review this information carefully.
• Address the concerns: If the non-renewal is due to specific issues, such as maintenance or safety hazards, take immediate action to resolve them. You can then submit evidence to your insurance company for reconsideration.
• Dispute the non-renewal: If you feel that the non-renewal is unfair or unjustified, you have the right to dispute it. Contact your insurance company's consumer affairs department to discuss your case and clarify their reasons. If you are still unsatisfied, you can reach out to your state's insurance department for further assistance.
• Shop for a new insurance policy: To avoid a lapse in coverage, start looking for a new insurance provider as soon as possible. Compare rates and coverage options from multiple companies, and consider factors such as customer service and claims handling. Choose a reputable company that meets your needs, and ensure that your new policy takes effect before the expiration date of your current coverage.
• Check your state's FAIR plan: Some states offer a FAIR (Fair Access to Insurance Requirements) Plan, which is a government insurance program for individuals who cannot obtain coverage in the private insurance market. This may be an option if you're struggling to find alternative insurance.
• Understand the difference between non-renewal and cancellation: Non-renewal occurs when a company decides not to renew your policy at the end of its term. On the other hand, cancellation occurs when a company terminates your policy before the expiration date, usually due to specific issues such as non-payment or fraud. Understanding this difference can help you navigate your options and choose the best course of action.

How to get insurance after non-renewal

If your auto insurance company decides not to renew your policy, it's important to understand your rights and options. Here are some steps you can take to get insurance after non-renewal:

• Understand the reason for non-renewal: Review the non-renewal notice sent by your insurance company, which should state the reason for non-renewal. Common reasons for non-renewal include late payments, fraudulent information, multiple moving violations, or a high number of claims.
• Act promptly: Once you receive the non-renewal notice, start looking for a new insurance provider as soon as possible. Driving without insurance is illegal in most states and can result in penalties and fines.
• Determine sufficient coverage: It is recommended to purchase liability insurance that matches your net worth instead of the minimum liability coverage required by your state. This will ensure you have adequate protection in the event of an accident.
• Research insurance companies: When choosing a new insurance company, consider factors beyond price. Look for companies with good customer service and claims handling. Research rankings and reviews to find reputable insurance companies.
• Compare quotes: Contact multiple insurance companies and compare quotes for the same coverage amounts. This will help you find the best rates and save money.
• Consider high-risk insurance: If you have multiple violations, a DUI, or a history of accidents, you may be considered a high-risk driver. Some insurance companies specialize in providing coverage for high-risk drivers and can offer more affordable rates.
• Maintain continuous coverage: Ensure that your new policy starts on or before the last day of your current coverage to avoid a lapse in insurance. A lapse in coverage can lead to higher insurance rates in the future.
• Explore state-specific options: If you're unable to obtain insurance through standard companies, look into state-specific options such as the Fair Access to Insurance Requirements (FAIR) plan. This is a state-run program that provides insurance to high-risk individuals who may not qualify for standard insurance.

Non-renewal and your rights

Non-renewal occurs when your insurance company decides not to continue your coverage when the policy expires. It is different from cancellation, which happens during the term of the policy or when the policy term is ending. Non-renewal can happen through no fault of your own. For example, your insurer might decide to reduce its number of customers in your area, or stop selling policies in your state or city.

Your rights

If your auto insurance company terminates your policy without your permission, the company has certain duties, and you have certain rights.

Your insurer must notify you within a certain time period, as dictated by the state. In New York, for instance, you must receive a 45- to 60-day notice before the expiration date, with reasons for the non-renewal. In Oregon, the notice period is 30 days.

The company must send you a written notice explaining why it is not renewing your policy. The notice must clearly articulate the specific reason(s) for non-renewal. The company may not simply state "fraud" or "misrepresentation" but must provide a factual basis for its decision. The notice must also explain that:

• You have the right to appeal the non-renewal.
• You may be eligible to buy insurance from your state's auto insurance plan if you cannot find coverage elsewhere.

If your insurer merges or restructures with another company, or if your insurer reclassifies your policy, the company must mail you a notice about the change 60 days prior to a change in your policy.

If you believe your company failed to follow the required steps when cancelling your policy, you may appeal the cancellation.

Reasons for non-renewal

There are many reasons a car insurance company may elect not to renew your policy. Most commonly, it considers you a riskier driver than when you purchased coverage. For example, you may have received a DUI or multiple less-serious moving violations, like speeding tickets.

Other common reasons for non-renewal include:

• Multiple insurance claims, especially for at-fault crashes
• You moved, especially across state lines
• Buying a new car

In some states, there are restrictions on the reasons insurance companies can choose not to renew a policy. For example, in New York, insurance companies aren't allowed to issue a non-renewal based on your age.

Frequently asked questions