Receiving a nonrenewal on your car insurance can be unexpected and confusing. A nonrenewal means your current insurance company no longer accepts you or another driver on your policy because it considers you too great a risk.
Essentially, your insurance company is canceling your insurance policy, and you will have to find coverage with another carrier by the time your policy expires. The question is, why do insurance nonrenewals happen, and what can you do about it?
- Bad driving behavior, including filing too many claims or lying on your application, may result in an insurance company choosing not to renew your coverage.
- Nonrenewal can also stem from more innocent situations, such as when you move and your old agent isn't licensed in your new state.
- Whatever the reason for the nonrenewal, you must call your agent, shop for a new plan, and find new coverage before your old coverage ends.
Reasons You Might Get a Nonrenewal
There are five common reasons your auto insurance company might decide not to renew your policy.
You Have a Risky Driving Record
If you have recently received a DUI or have been racking up the speeding tickets, there is a good chance you will be seeing a nonrenewal notice from your insurance carrier soon. Preferred carriers often nonrenew drivers with bad driving records because the likelihood of a large claim is high. Preferred insurance carriers will not insure high-risk drivers because the potential risk is detrimental to its other clients.
You've Filed Too Many Claims
Multiple at-fault claims can warrant a nonrenewal letter from your insurance carrier. The typical rule when it comes to insurance is you never want to have three at-fault claims within three years of each other. If you run into a streak of bad luck and have a couple within a short time frame, you had better be very careful the next three years. Once you file a third at-fault claim within three years, more than likely you will be receiving a nonrenewal notice.
You Moved Out of State
The majority of insurance agents are only licensed in one state. Insurance policies need to be issued in the state in which you reside. If your insurance company is notified of your move out of state, you will be nonrenewed. The post office can notify the insurance carrier, or you could notify the insurance carrier of the move yourself. Don't let this rule catch you off guard. Plan on switching car insurance when you move out of state.
The exact reasons that your insurance company is allowed to nonrenew you vary by state, as does the amount of notice they are required to provide to you. Check your state's laws to ensure that the timing and reasons given by your insurer are valid.
You Committed Fraud on Your Insurance Application
If your policy was underwritten based on false information that you provided, then your insurance company reserves the right to cancel your policy.
Your Insurer No Longer Offers That Type of Policy Policy
Sometimes your insurance company may not renew your policy simply because they don't offer it anymore. If that's the case, you may be able to simply set up a new policy with your insurer under different terms.
What to Do if You Get a Nonrenewal Notice
If your insurance agent sends you a notice of nonrenewal, it's important to investigate and make sure you understand your options.
Call Your Agent
If you receive a nonrenewal notice in the mail, your agent should be the first call you make. It is possible a mistake has been made. If the cancellation is due to another driver on your policy, your agent may be able to set your policy up with a driver exclusion. The excluded driver will have to purchase another car insurance policy to remain covered.
If your agent provides valid reasons for nonrenewal, then you may have to face the facts and find a new policy.
Start Shopping for Insurance
It may not have been in your plan, but if you are being forced to switch insurance carriers, you need to shop around. Take the time to get a few different quotes. Independent agents have the ability to check with different car insurance carriers. Chances are if you are already insured with an independent agent, you will be able to keep your business with the agent and only switch insurance carriers.
Switch Carriers on or Before Your Expiration Date
It is important to switch your insurance carrier in a timely manner, as a lapse in coverage can have serious consequences. It's possible to set up a new policy well in advance of your nonrenewal date and request that your new policy start on a specified date.
The Bottom Line
Nonrenewals need to be taken seriously. Whether you clear up the issue with your insurance carrier or you start a new car insurance policy with another carrier, it's important to take action. If your policy is being nonrenewed because of your driver risk status, you can expect your insurance rates to go up. Pay close attention to your driver risk status so you can prevent receiving a nonrenewal in the mail.