Car Insurance Nonrenewal and How it Differs from Cancellation
Car insurance nonrenewal is a situation in which your car insurance company has chosen not to renew your policy at the end of its term. A nonrenewal may feel a little jarring, and you'll most likely need to get coverage from another insurer, but your rates won't necessarily increase as a result.
Car insurance nonrenewal is different from having your insurance canceled in the middle of your policy, which is a rarer and more significant issue.
What is car insurance nonrenewal? When can it happen to me?
At the end of your car insurance contract, your provider may make changes to your insurance policy. It has the option to renew the policy as it stands, adjust the rates it charges for your coverage or to not renew the contract at all.
If your company has chosen not to renew your policy, it must send you a written notification a set number of days before your current policy ends. This is to give you enough time to find a new insurer. The exact amount of time varies by state. For example, in New York it's between 45 and 60 days, while in Oregon it's 30 days. The written notice generally also includes a reason for nonrenewal, which is often required by law.
Why wasn't my car insurance renewed?
There are many reasons a car insurance company may elect to not renew your policy. Most commonly, it considers you a riskier driver to insure than when you purchased coverage. For example, you may have received a DUI or multiple less-serious moving violations, like speeding tickets.
Common reasons for car insurance nonrenewal
- Multiple insurance claims, especially for at-fault crashes
- Multiple tickets
- DUI or DWI
- Bought a new car
- You moved, especially across state lines
It's possible that your insurance company will drop you at the end of your policy term for something that's not necessarily negative, like buying a new car. And you can even be dropped through no fault of your own. Car insurance companies are constantly making adjustments to their overall risk profile, and it's possible you may have your policy non-renewed without any of your circumstances changing at all.
For example, the insurer may have decided to stop selling insurance entirely in your city or state. There's not much you can do about it except get a quote from another insurance company.
Fortunately, there's no inherent penalty to having your car insurance nonrenewed. You won't necessarily pay higher rates at another company. However, if your insurer drops you for a serious offense, such as a DUI, you are likely to see a rate increase, regardless of which company is insuring you.
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What to do if your car insurance is not renewed
If you receive a letter of nonrenewal from your insurance company, it will include the reason it opted to discontinue your policy. You can usually contact your insurer for more information or to argue your case if you feel the nonrenewal was unwarranted.
Some states have restrictions on the reasons insurance companies can choose to not renew a policy. For example, in New York, insurance companies aren't allowed to issue you a nonrenewal based on your age — in other words, because you got older. If you suspect the reason your insurer gave for nonrenewal is illegal, you can contact your state's department of insurance for clarification and to file a complaint.
After you've been nonrenewed, you'll likely need to get coverage from a new insurer. Car insurance is required nearly nationwide, and there's no grace period after nonrenewal. Your letter of nonrenewal will list the date at which your current policy ends, so it's crucial that your new policy takes effect before then. Otherwise, you will have lapsed insurance.
Check with multiple auto insurance companies to see which one will offer you the best rates. It's even possible that you'll pay less for coverage at your new company. Keep in mind that any changes to your driving history or coverage details, such as a recent accident or new driver in the family, may affect your car insurance rates.
You may need to consider a nonstandard insurance policy if you've been involved in several incidents that make it more expensive to insure you, such as at-fault crashes. We recommend nonstandard insurance only as a last resort, as nonstandard insurers typically have higher prices and more poorly rated customer service than their mainstream counterparts. It's worth the extra effort to try to find a standard insurance company that will take you, rather than going with a nonstandard company right away.
Car insurance nonrenewal vs. cancellation
Having your car insurance canceled is a much more serious issue than having it nonrenewed, and you can be penalized for having your car insurance canceled. Many states limit the reasons an insurer may cancel a car insurance policy in the middle of the term — often after the first 60 days your car insurance policy is up. Common reasons your insurance company can cancel your policy include:
- Failure to pay for coverage
- Suspended or revoked license
- No vehicle registration
- Lying on your insurance application
- Fraudulent insurance claim
Regardless of the reason for cancellation, you should contact your insurance company immediately to rectify the problem. You'll only get a short window to take care of the issue before your insurance coverage ends — typically only a few weeks, which is much less time than you'll have after a nonrenewal.
Also, unlike a nonrenewal, you are likely to be penalized by your new insurer if your previous insurance policy was canceled. However, if the cancellation is due to nonpayment, you may be able to reinstate coverage by paying your bill, plus a late fee.