There is a difference between when an insurance company will issue a cancelation versus nonrenewing a policy. The basic difference is the time frame which each occurs. The other largest difference is that a cancellation may have a negative impact on your future insurance policies.
Insurance companies can only cancel a policy that has been in effect for more than 60 days for three reasons.
- 1. You don’t pay your bill.
- 2. You lied committing fraud or misrepresented yourself while filling out your application.
- 3. Your driving privileges are no longer.
A cancellation can be issued with little or no warning, although some states require a small notification. It is also usually in the insurance company’s best interest to provide you with at least some notice.
Insurance companies can issue a nonrenewal for your policy though for almost any reason. Companies will sometimes change the line of business that they want to insure, so they will nonrenew a whole segment of business. Other times customers get a nonrenewal, it might be just the company shrinking its coverage in a certain geographical area.
There are yet other times when you did something that caused your risk to greatly increase, say for instance a DUI. This may cause your insurance company to issue a nonrenewal. Frequently, a change like this will instead create a financial change in your policy. I’ve seen rates just simply double for a DUI charge found. It is up to the company how they deal with added risk.
When a nonrenewal is issued, you will get a written notice in the mail and have a certain number of days to find new coverage. The number of days varies by state, but I don’t think any state gives less than 30 days.
You may still be able to find coverage for the same prices or close as you had before. There is no reason to sweat a nonrenewal. A nonrenewal isn’t always a bad thing. It is more a matter of policy and you are always just a statistic with your insurance company. You will simply need to find a new agency to supply your coverage, I would always recommend using a local agent.
You should do everything that you can to prevent a cancellation from occurring on your policy history. They can cause you a lot of money in the end, which said getting a nonrenewal isn’t really a big deal. You just move on either way though. Keeping insurance active is an important thing for your overall finances.