Insurance Policy Non-Renewal vs Cancellation – What’s the Difference?
The biggest difference between insurance policy non-renewal vs. cancellation is that your insurance score will suffer if a policy is canceled by your insurance company. Insurance policy non-renewal will not harm you as you shop for new car insurance coverage, but an insurance policy cancellation due to non-payment or fraud can make it harder to find a new policy at an affordable rate. Learn more in our guide below.
Free Insurance Comparison
Secured with SHA-256 Encryption
UPDATED: Jul 16, 2021
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We are not affiliated with any one insurance company and cannot guarantee quotes from any single insurance company.
Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different insurance companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about insurance. Our goal is to be an objective, third-party resource for everything insurance related. We update our site regularly, and all content is reviewed by insurance experts.
For insurance companies, there are two ways to stop providing coverage on your insurance policy. The first method is to cancel the policy, and the second is to decide not to renew it. The difference between insurance policy non-renewal vs. cancellation is as big as the difference between night and day, and how much trouble you will have getting replacement insurance will depend on which method was used to end your current coverage.
All things considered, it is much easier to overcome a non-renewal notice than a cancellation. If your policy is canceled, you may have difficulty finding another company who will write you a policy. If your policy is non-renewed, there are no negative connotations to overcome, so all you have to do is shop around for new coverage and compare insurance quotes. If the new insurance company asks why you are changing insurers, you can either explain that your policy is not being renewed, or fudge and tell them that you are no longer happy with the company you have been doing business with.
Non-renewal simply means that the insurance company has chosen not to renew your policy. You will have to shop for a new policy before the old one is terminated, but you may not have to pay higher rates. As long as you have new insurance in place before the old policy comes to an end, including notifying the DMV of your new insurance carrier (for car insurance), you may not suffer any other consequences of the insurance company’s decision.
However, notifying the DMV is going to be crucial. If your current insurer cancels your policy, they will notify the DMV of the policy termination as soon as the termination becomes effective, and failure to secure other coverage before that time could result in your vehicle registration or driver license being suspended until you have provided proof of insurance to the DMV.
A cancellation works differently. Your policy can only be canceled if you miss payments, or get so many tickets that your license is suspended or revoked. Having a cancellation means that other insurance companies will take a closer look at your credit and driving histories and you can expect to pay higher premiums.
Having a policy canceled is extremely bad, from the insurance point of view, because it indicates that at least one insurance company no longer thinks you are worth the risk to write insurance for.