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What's the
difference between
cancellation and
nonrenewal?
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There is a big
difference
between an
insurance
company
canceling a
policy and
choosing not to
renew it.
Insurance
companies cannot
cancel a policy
that has been in
force for more
than 60 days
except when:
- You fail
to pay the
premium
- You have
committed
fraud or
made serious
misrepresentations
on your
application.
Nonrenewal is a
different
matter. Either
you or your
insurance
company can
decide not to
renew the policy
when it expires.
Depending on the
state you live
in, your
insurance
company must
give you a
certain number
of days' notice
and explain the
reason for not
renewing before
it drops your
policy. If you
think the reason
is unfair or
want a further
explanation,
call the
insurance
company's
consumer affairs
division. If you
don't get a
satisfactory
explanation,
call your
state insurance
department.
The company may
have decided to
drop that
particular line
of insurance or
to write fewer
policies where
you live, so the
nonrenewal
decision may not
be because of
something you
did. On the
other hand, if
you did do
something that
raised the
insurance
company's risk
considerably,
like committing
fraud, the
premium may rise
or you may not
have your policy
renewed.
If your
insurance
company did not
renew your
policy, you will
not necessarily
be charged a
higher premium
at another
insurance
company.
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Information
Institute, Inc.
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