Car Insurance Non-renewal and Finding New Coverage

Auto insurance companies can decline to offer renewal terms to their policyholders for many reasons including increased risks due to recent at fault accidents, too many claims or traffic tickets. Since this is an action taken at the end of a policy term, it is unlikely to cause premium increase directly or affect the chances of the motorist finding a replacement coverage. However, the reasons why they decline to carry on the coverage like too many recent traffic tickets will be seen by other automobile insurers while they offer quotes and most likely affect the costs.

State authorities set conditions as to when companies aren’t allowed to deny car insurance renewal. These conditions are mainly in place to prevent discrimination but accept most valid reasons. Still, companies are required to give notice and explain the reasons. And several states may allow vehicle insurance non-renewal only after a certain period, like a year, passes from the inception date. Motorists are usually allowed to appeal against this decision by applying to their state insurance commissioners, but the limit period for appeals is usually very short.

Most policies in the US are for 6 month only because carriers want to leave their options open. If they find that you are becoming riskier, they can either increase the premium or don’t offer automobile insurance renewal at the end of the term. They are in the business of risk management and pricing. And they are after all businesses with profit targets and shareholders to report to.

What Is Non Renewal of Car Insurance?  

It is a refusal to extend the coverage once the policy expires. Once companies decide to let someone go they have two options. They either end it immediately or wait until the policy expires. In practice, they are expected to offer a quote for the next term to keep it running. However, vehicle insurers can change their minds and choose not to offer a renewal quote. It is effectively a termination but it isn’t a cancellation because the policy contract is already set to expire, unless it is renewed.

Policies are generally open-ended contracts with break clauses. Both parties can break away at the end of the term without any penalties. Otherwise, it would continue as usual when the company offers good terms and the customer pays the premium. That is why automobile insurance non-renewal isn’t a cancellation in contractual terms.  

Normally, A carrier can decide to drop coverage if policyholders file multiple claims or get a few tickets in a short period or multiple reasons raise their risk profile in the eyes of the underwriter. Also, they may be giving you a notice because they decide not to sell certain types of policies or in certain locations.

One very important difference between cancellation vs non-renewal is that the former goes on driving records and seen by other providers you may want to use. On the other hand, the latter doesn’t get recorded and therefore its effects aren’t as dramatic. Hence you should be able to find a suitable replacement quickly after being dropped.

Getting Auto Insurance following Non Renewal Notice

It is best not to take it to heart and get on with it efficiently. Both you and the insurer can choose not to keep a policy. Then, the main concern is to make sure you don’t have a lapse. Arranging a replacement in time will prevent a lapse in coverage. Usually, around ten days to a month notice is enough in most states and in fact it is enough to arrange replacement coverage.

Non renewal of vehicle insurance doesn’t directly increase premiums. If it has nothing to do with driving or claim history you can get affordable quotes somewhere else. You may even find much cheaper rates if you shop around.

If it was due to recent claims or serious driving offences, they will show up on records and that will increase the premium. How much it will go up will depend on what caused it. If there are too many claims or a recent DUI you can face a steep premium hike. You may want to look into excluding a driver if the drop is due to a listed person.

Whatever the reason, it is usually difficult to overturn a car insurance non-renewal decision. Now, you need to shop around for the most economical coverage you can find. So, don’t waste time and start getting quotes online and/or through agents. Challenge the decision if you wish but get prepared at the same time.