Insurance is not a gift or a right, it is a product that you buy and that protects you against all the insurable incidents that can put your financial present and future at risk. As such, insurance is also a contract that can be cancelled or that either you or the insurance company can choose not to renew.
Insurance cancellation and non-renewal are two completely different actions.
- In a cancellation, your insurance company is the catalyst and the cancellation can occur any time during the policy term—not just upon renewal. An insurance company can cancel a policy for many reasons, including:
- You don’t pay your premium by the end of the grace period.
- It is found that you committed fraud with material misrepresentation on the application.
- You are convicted of a crime which is the result of an activity that would have increased your risk to the insurer.
- You purposefully increase the risk you pose to the insurance company or engage in acts that are purposefully dangerous in terms of claims.
- In non-renewal, either you or your insurance company purposefully choose not to renew your policy after its expiration. This may happen because your lifestyle or circumstances have changed and the insurer no longer sees you as an insurable risk; it can happen because an insurance company stops providing a certain line of insurance coverage; it can also happen because you decide to get a policy with another company instead of renewing your existing policy either because premiums are less expensive or you find a company with a better A.M. Best rating, or any number of other reasons.
If you choose not to renew your own policy, there isn’t much you need to do except not pay the premium. If you are on an auto-renewal plan that automatically debts your bank account, remember to call the insurance company and stop the payment before it goes through and triggers the renewal.
If your insurer chooses not to renew the policy, they are required to give you notice before it is not renewed. If they choose to cancel the policy, they still must give notice before it is cancelled.
Whether your policy is non-renewed or cancelled at the insurer’s behest, you have the right to fight it or get a written explanation. To exercise this right, you need to contact the consumer affairs division of your insurer. If you are still unsatisfied you can contact the Department of Insurance.