What is Auto Insurance Cancellation and Non Renewal

Maintaining good standing with your auto insurance carrier is one of the principal responsibilities of driving a car. Although many people take care in keeping those payments up-to-date, it's not unusual for lapses to occur due to one reason or another. It may not surprise you to learn that many thousands of people come online each year trying to understand the difference between auto insurance cancellation and non-renewal.

In a nutshell, auto insurance non-renewal is what occurs when your policyholder decides you are no longer worth the risk of coverage. Poor driving records or an abundance of claims may contribute to the decision, but either way you should be notified about a month in advance if such action is taken. Needless to say, future carriers don't look favorably upon events such as these, so you may want to appeal through whatever means your carrier provides.

Auto insurance cancellation tends to be more serious, and can come about as a result of any violation pertaining to your agreement with that company. Whether the problem is late payment, arrest for DUI or insurance fraud, many auto insurance companies reserve the right to cancel your policy at any time. Notice is required here as well, but you may still find yourself scrambling to land a new carrier without a lapse in your policy.

The simplest way to avoid cancellation or non-renewal is to set up an automatic payment system in advance. Most online banking companies now let you pay insurance like this automatically, and you may be able to provide an additional level of support with a savings account. Of course if the problem relates to your driving record, higher rates in the future may be an inevitable consequence.

If you want to learn more about how auto insurance works and when you can switch policies, don't be afraid to speak your agent about such questions. Often a simple conversation is all that's required to lay down the ground rules in terms you can readily understand. Make sure to check on what kind of a grace period you can expect in the event of a lapsed payment.