Cancellations vs. Non-renewals

Cancellations Vs. Non-Renewals

Cancellations vs. non-renewals: do you know the difference? One day, Marty opens his mailbox and finds an urgent letter from his insurance company.  Upon opening the envelope, he discovers that his insurance company has cancelled his insurance.

At the same time, Marty’s neighbor Chris opens her mailbox.  She also finds an urgent letter from her insurance company which states that they are not renewing her policy.  The insurance industry calls this a non-renewal.

Is this the same action?  If not, what are the differences? And . . . what should Marty and Chris do?

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Cancellation is far more serious than a non-renewal.  Marty’s insurance company is ending his coverage as soon as state statute will allow.

In most states, insurance companies can cancel a policy for any reason within the binding period, which is about 60 days after the policy begins.  After that, the insurance company has to follow state laws on canceling policies.

It may become difficult, if not impossible, for Marty to find new coverage with another insurer at an affordable rate.  Insurance companies view cancellation as a major offense and will determine Marty to be a very high risk.

What happened in Marty’s case?  It may be that he misrepresented the facts on his application, such as neglecting to mention a driver’s license suspension or a previous insurance cancellation.  Or, it could be that he forgot to pay his insurance bill.

Fortunately, the latter was the case for Marty.  He was later able to work out an agreement with his insurance carrier through intervention by his independent insurance agent.  Even though it required him to pay the premium for the entire year, Marty was relieved that he wouldn’t need to face the prospect of walking to work.


Chris’s situation of non-renewal is less serious.  Her insurance company may no longer want her as a client because she reported too many fender benders within too short a period of time.  Chris should be able to find insurance with another company, although it may be at a higher rate.  She should shop around immediately, realizing that she will be covered by her current policy until the expiration date.

What to do in the event of a cancellation or non-renewal

If you are faced with a cancellation or non-renewal, remember that your insurance needs and the laws are complex. Immediately contact your independent insurance agent. Coverage and underwriting criteria vary wildly from company to company. Underwriters are people who can have bad days. Laws and your rights under those laws are vastly different from state to state. Your independent agent knows the laws and companies that provide coverage options.

Don’t try to handle your insurance without an agent you trust.

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How Do I Buy Car Insurance?

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Enhanced Insurance is not written by attorneys. If you’re looking for legal advice, you need to contact a lawyer. Further, insurance practices and forms change constantly and are varied from state to state. For definitive answers in your area, contact a local agent.

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