Car Insurance Non-Renewal Vs. Cancellation (2024)

Your car insurance company may drop you as a customer through either policy non-renewal or cancellation. The timing and reasons for the decision affect whether an insurer do a non-renewal or cancel a policy.

Car Insurance Non-Renewal vs. Cancellation

Here’s how to distinguish between cancellation and non-renewal of car insurance:

• Cancellation can happen during the term of the policy or when the policy term is ending. Car insurance companies typically can’t cancel a policy that’s been in force for 60 days or more except for specific reasons such as: You commit insurance fraud, you don’t make payments, you get convicted of a DUI or your driver’s license is suspended or revoked. Insurers may cancel a policy for those reasons or may instead decide not to renew your policy at the end of the policy’s term.
• Nonrenewal happens when your insurance company discontinues your policy at the end of the coverage period. A non-renewal can happen through no fault of your own. For example, perhaps the insurer has decided to reduce its number of customers in your area. Car insurance companies have more leeway to issue a non-renewal notice.

What Is Car Insurance Non-Renewal?

Non-renewal is when a car insurance company decides not to renew your policy. This happens at the end of your policy’s term.

There are multiple reasons why an insurer may issue a non-renewal, but that decision should not affect whether you can find another policy and doesn’t directly affect car insurance rates.

Here’s what to know about car insurance non-renewal.

• It can happen at the end of your policy.
• States may require the Insurance company to give you a notice of a minimum number of days and explain why you’re not being renewed. For instance, New York requires at least a 45- to 60-day notice before the expiration date with reasons for the non-renewal.
• Non-renewal may occur if your company stops selling policies in your area or reduces the number of policies.
• A company could non-renew your car insurance policy if you commit fraud.
• Multiple car insurance claims or accidents on your record can cause non-renewal.
• Non-renewal doesn’t generally lead to higher car insurance rates when you go to buy a new policy.

Reasons for Non-Renewal of Car Insurance

Non-renewal occurs when the insurance company decides not to continue the coverage when the policy expires. Here are 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 caused car accidents.

What Is Car Insurance Cancellation?

Car insurance cancellation is more serious than non-renewal and may make finding a new car insurance policy difficult. At the very least, you’ll probably pay more for car insurance after a cancellation.

• Cancellation can occur any time of the year if you commit fraud, don’t pay your car insurance costs, or your license is suspended or revoked.
• Insurers can’t cancel car insurance policies because of too many accidents or claims but may cancel you if you’re convicted of a DUI.
• State law may dictate how much time an insurance company must give you for policy cancellation. For instance, New York demands that insurance companies notify you at least 20 days before the cancellation or 15 days if it’s canceling coverage because you didn’t pay premiums.
• An insurance company may refund you part of the premium you paid if your policy is canceled.
• A policy cancellation may give you problems when you want to buy a policy from another company. And you will probably pay higher car insurance rates.

Reasons for Car Insurance Cancellation

There are several possible reasons for an auto insurance policy to be canceled. The most common reasons are late payments and failure to disclose information on your car insurance application.

Other possible reasons for a canceled auto insurance policy are:

• Poor driving record, including at-fault accidents or moving violations over a set period of time, such as 36 months.
• Suspended driver’s license or registration.
• Providing fraudulent information, such as lying about an auto insurance claim.
• Felony convictions, such as driving under the influence.
• You drive for a rideshare company, such as Uber or Lyft and fail to tell your insurance company.
• You have a medical condition that makes you an unsafe driver. For example, Illinois allows a car insurance company to cancel your car insurance if you’re diagnosed with epilepsy and your doctor doesn’t offer proof that your epilepsy won’t impair your driving.

Notice of Non-Renewal or Canceled Car Insurance

If your policy is non-renewed or is canceled, your auto insurance company will send an advance notice with an explanation.

The time frame depends on state laws and the circ*mstances, but you typically get a notice 30 to 60 days before the cancellation date. For non-renewal, it’s generally 10 to 75 days.

How to Get Car Insurance After a Non-Renewal or Cancellation

If you receive notification that your policy is going to be canceled or discontinued, you’ll want to move quickly to get new coverage in place before the termination date. What’s the rush? Your insurance company is required to contact your state’s motor vehicle department once a car insurance policy is canceled. And you need car insurance to legally drive in most states.

If you can’t find new insurance coverage, your state might require you to turn in your car’s tags and surrender your driving privileges.

If you drive uninsured and cause an accident, you’re responsible for paying the medical and repair bills.

If you’re caught driving uninsured, you also face penalties and fines. Additionally, you generally pay more for car insurance after a lapse in coverage because insurance companies consider coverage gaps to be high-risk behavior.

Here’s how to get car insurance after a non-renewal or cancellation notice.

Determine sufficient coverage

It’s smart to buy enough liability car insurance to match the amount of your net worth. Avoid buying only the minimum liability coverage needed to drive legally in your state, as this may not be enough to cover even minor accidents.

Research car insurance companies

You don’t want to choose a company based only on price. Customer service and claims handling are also important. Find the best car insurance companies for your shortlist by researching rankings and reviews.

Comparison shop

Compare car insurance quotes from multiple companies for the same coverage amounts. Comparing quotes is often the best way to save. You won’t know what a good deal is unless you have the numbers from at least a few insurers.

Even if you have multiple violations, a DUI or caused a few accidents, you’ll find some companies charge much less than others. For example, Forbes Advisor analyzed DUI car insurance rates among large car insurance companies. Our analysis found that average car insurance rate increases for DUI ranged from 29% for Allstate and Progressive to 148% for Westfield.

Ask for discounts

Be sure to get all the car insurance discounts for which you’re eligible. You may be able to snag a price break by paying in full, paying online or bundling your auto policy with your home or renters insurance.

Buy your policy and set the effective date for the day your old policy expires

Be sure your new policy will be in place when your old policy ends. That way, you avoid a lapse in coverage and won’t be driving uninsured. The same goes if you’re switching car insurance companies because you found cheaper car insurance elsewhere.