Cancellation and non-renewal of policies are two similar aspects of insurance. When a policy is surrendered due to various reasons, the Auto Insurance coverage will cease to exist and it is generally termed as cancelled.
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The insurance company also cancels a policy if the policyholder gets into situations warranting the cancellation. In case of drunk driving or license getting suspended, the driver’s auto insurance policy can be cancelled by the insurance company. When a policy holder does not pay insurance premiums on time or policy holder gets arrested or commits any fraud, the insurance company has the right to cancel the policy.
Many a times the insurance policy holder finds a better policy with another insurance company than the existing one. In such cases the policy holder opts for cancelling his existing policy. The policy holder as well as the insurance company can cancel the policy at any point of time. The insurance company may levy cancellation fees depending on the terms of the policy.
Procedure for Cancellation of Auto Insurance Policies
In case you want to cancel your auto insurance policy before expiry of the policy, you should send a request letter to the insurance company. The insurer arranges to refund any premium that is due to the policy holder. If any claim has been made on the policy, then no premiums shall be payable to the party.
There may be cases where no refunds are made to the policy holder in case of termination or cancellation. If the insurance company decides to cancel the policy, they will have to give a 30 day notice to the policy holder. This will help the policy holder to seek cover with any other insurance company. Cancellation of auto insurance by the insurer is often seen as a serious offence and it also sets a bad credit history for the policy holder.
Cancellation occurs during the life of the auto insurance policy.
Non- Renewal of Policies
Non renewal is where the policy holder or insurer decides not to renew the policy. There could be instances where the policy holder might have lost his job. It may also be due to finding a better deal with elsewhere. So non-renewal is the only option. On the other hand, the insurer can also decide to not to renew the policy for a variety of reasons. The main reason is repeated too many blemishes on the driver’s record. It may be on account of drunk driving or bad records or too many accidents caused or many tickets issued, the insurance company can decide to not to renew the existing policy. The insurance company’s decision is based on the fact that the policy holder is a potential high risk to them. The insurance company issues a one month notice to the policyholder.
The insurance company may decide to discontinue a particular policy. So renewal of policy is not allowed in such cases. It is very important to understand the concept of auto insurance cancellation and non-renewal of policies. Today with the convenience of the internet, you can use online banking facility to pay your insurance premiums on time regularly or set up automatic payment system. This will avoid late premium payments thereby preventing cancellation or non-renewals of your auto insurance policy.
Non renewal is less serious as compared to cancellation and it happens only at the end of the policy term.