People think that cancellation and non-renewal signify the same thing. Both result to elimination of insurance. It results to the owner of the car having to find a new policy. Differences separate cancellation and non-renewal. These differences determine costs of the next insurance policy.
Cancellation means immediate end of your policy. This could mean that your policy will end at a specific date and time, based on a notice. Cancellation of policies could come from many reasons including accumulation of traffic tickets, failure to pay premiums, or change in the policy of a company. Yes, insurance companies have the option to cancel policies at their prerogative. They can even do it without any underlying reason.
Non-renewal means your policy will be effective until the end of the policy duration. At the due date, your policy will no longer be effective. You will need to find another insurance provider. However, the burden of time will be on your side. This costs less compared to cancellation because you will be avoiding other charges. You simply need to transfer coverage from one insurance provider to another without any gaps of coverage.
Cancellation makes it difficult to obtain another car insurance policy because insurance policy cancellations are actually indicators of an insurance company’s choice of not wanting a person as a policy holder. This gives a bad image when you try to get a new policy in another company. The other company might see you as too much of a risk for a policy holder. Cancellation will prompt another company to do a check on you before they give you another policy. This could even mean bigger charges or rates.
When you fail to pay premiums on time, you will be given a notice that states a company’s intent to cancel your policy. When faced with such, it only means that the company will cancel your account if you do not make prompt payments or other requirements. This notice gives you 5 to 30 days before cancellation. It gives you time to review your deficiencies and settle them. You can also look for other insurance companies by this time.
Cancellation and non-renewal are different, but they sure are situations that you do not want yourself to get into. When you are the kind of person who likes to go from one policy to another and from one insurance provider to another, you are sending a message that you are a high risk individual. This discourages an insurance company from working with you. Avoiding this will actually be advantageous because you can get insurance discounts if you manage to maintain your contract with a single company.