Difference between Car Insurance Non-Renewal and Cancellation
After acquiring a few rudimentary terms, grasping your knowledge on the concepts of Car Insurance becomes plausible and handy, for instance, Car Insurance Non-Renewal and Car Insurance Cancellation. Although seemingly identical, they differ greatly. We will explain the difference between Non-Renewal and Cancellation of Car Insurance in this article.
Cancellation of Car Insurance
When a car insurance policy is cancelled before the expiration date, it is known as Cancellation of Car Insurance. Both the insurance company and the insured can cancel the policy. The latter is typically the one who initiates cancellation. Insurance companies also have definite guidelines for ending a policy.
Non-Renewal of your Car Insurance
Basically, non-renewal of a car insurance policy refers to when the insurer or the insured does not renew the policy after it has ended. It is not necessary for the insured to provide reasons for not renewing their insurance policy. A notice must still be given before the policy ends and a valid reason should accompany it in order to avoid inconvenience.
Car insurance can be cancelled by the Insurer for the following reasons:
A car insurance cancellation may be initiated for any of these reasons:
> Medications that impair your health
Insurers may cancel your car insurance if they discover that you have a medical condition that could hinder your driving ability. Epilepsy, dementia, and vision problems are among the high-risk medical conditions.
> Revocation of the vehicle’s registration
Suspended vehicle registration may result in a car insurance cancellation by an insurer. On the other hand, an intoxicated driving record or engagement in illegal activities can result in a suspension of a vehicle registration.
> False or misleading claims from the insured
When the insured raises a fraudulent claim, an insurer may cancel the policy. It is possible for an accident to be staged or fabricated in order to obtain a claim settlement.
> Reckless driving
If you have a history of multiple car accidents within a short period of time, this could lead to your license being revoked. Consequently, your insurer may cancel your policy if they consider you a high-risk customer.
> The concealment of information
A car insurer may cancel a policy if the vital information about an insured vehicle is concealed.
Insurance Cancellations may be triggered by the insured the following reasons:
Let’s now examine five of the possibilities why the insured may cancel the policy:
> Theft or loss of your vehicle
It is probably a good idea to cancel your car insurance if your car has been stolen or lost. Unless the policy you have covers comprehensive coverage. As per the policy document, you can redeem the Insured Declared Value (IDV) of the vehicle.
> An abrupt move
Your policy will terminate if you move to a different locality before it expires. You will also lose coverage in your newly relocated area since your insurer no longer operates there. We recommend switching to a new insurance company within your reach.
> Switching to another insurer or opting for a different policy
It is likely to buy better coverage with a replacement car insurance policy than the current one you already have. Upgrades are also an option. Then you may opt to cancel your existing policy since it is no longer necessary or required.
> Automobile shipments
Your car insurance coverage will no longer be required if you sell your car to someone else. Cancelling your insurance is the convenient option in this situation.
> Upon ceasing to drive
A car insurance cancellation can be initiated by a person who no longer drives or owns a car. Normally, insurance providers advise against this as a short-term fix and recommend it as a long-term solution.
Reasons behind the refusal of Car Insurance Renewal by the Insurance Companies are as follows:
Insurance companies can also cancel policies, in addition to the insured. Non-renewal of car insurance is due to the following reasons.
If you engage in illegal driving practices, your car insurance will be cancelled. It is also possible that some insurers will not renew your car insurance once it expires.
> Speeding ticketed
Insurers may consider you a high-risk client if you receive multiple speeding tickets continuously. Therefore, you may not be able to renew your car insurance in the following term.
> Excessive number of claims
An insurer may view you as high-risk if you make several claims or are involved in multiple accidents during the term of your policy. As a result, the insurer may refrain from renewal.
> Moving to a new location
An insurance cancellation can also be based on this reason. It is possible to not renew your car insurance policy when relocating to a city that is not covered by your insurance provider. Alternatively, you may choose another company.
> Coverage ceased
There are times when car insurance companies decide to discontinue certain coverage. In most cases, an updated plan is rolled out after the next plan cycle. If that is the case, you may decide not to renew your current auto insurance policy and find a better one.
Let’s Wrap Up!
In spite of the fact that the meanings of non-renewal and cancellation are seemingly similar, they are very different. A car insurance policy is cancelled when it is terminated before its expiration date. In contrast, when an insurance policy is not renewed after it expires, it is considered non-renewal. To avoid complications, you should also buy a comprehensive insurance policy as soon as possible if you come across either of these events.lk