What to Do When an Insurance Carrier Won't Renew Your Policy?
You’re used to the drill by now: Every year or six months, you send a check to your auto insurance provider. But what if your auto insurance provider decides not to renew your policy after your current coverage period ends?
This can happen and it’s known in the insurance business as a non-renewal. It’s different than having your insurer cancel your auto policy before its expiration date. And you might face a non-renewal even if you have a spotless driving record.
There are several reasons why your insurer might decide not to renew your policy. And your only option if this happens to you? You’ll have to start searching for auto insurance from a new provider.
Insurance cancellation versus non-renewal
Auto insurance providers are limited as to when they can cancel a policy already in force. If your insurance policy has been active for more than 60 days, your insurer can only cancel your policy if you don't pay your premium or you have committed fraud or lied on your application for insurance.
Your insurer can also cancel an existing auto policy if your driver's license has either been revoked or suspended.
Your insurer, though, can always choose not to renew your policy when it expires. And it can do this for a number of reasons.
Your insurer might not renew your policy because of your bad driving habits. Maybe you've gotten too many speeding tickets or been involved in too many accidents. Maybe you've been arrested for driving under the influence. If this is the case, your insurer might consider you too high of a risk and might decide against renewing your policy after six months or a year has passed.
But there are times when an insurance company won't renew your policy due to no fault of your own. An insurer might elect not to do business in a certain community or state. Because you happen to live in a certain ZIP code, you'll have to search for auto insurance from another provider.
Your insurer might determine that originating policies in your ZIP code is simply too costly. Maybe your area has a history of hurricanes. Or maybe the rate of auto break-ins is high in your neighborhood. These are all reasons why an insurer might decide not to renew your policy.
John Espenschied, agency principal and owner with St. Louis-based Insurance Brokers Group, says this scenario can happen to even the best of drivers.
It can even happen in an area that doesn’t see excess damage by hurricanes or a higher rate of car break-ins, Espenschied says.
"Anything is possible, including that their insurance agent no longer represents that company and the company non-renews all policies issued by that agent," Espenschied says. "Depending on the loss history in a particular market, the insurer may feel it's not worth continuing coverage due to risk characteristics and decide to pull out."
Insurers might even start issuing non-renewals because they’ve already insured what they feel are too many drivers in a certain area, Espenschied says.
“A carrier might decide that it is too heavy in certain markets from a risk standpoint and issue non-renewal notices,” Espenschied says. “Sometimes carriers will sell a portion of their business to another carrier.”
Know your Insurance Rights
Your insurer must follow some rules when not renewing your policy. It must, for instance, send you written notice that it plans not to renew your policy a certain number of days before your policy expires.
How many days depends. Some states require insurers to provide at least 30 days notice before non-renewal. Others require 45 days or 60. Check with your state to be certain.
Your insurer in its written correspondence must also provide a reason for not renewing your policy. This reason might be something that you did – too many speeding tickets – or it might be something out of your control, such as crime rates rising in your ZIP code. But whatever the case, your insurer must provide you with a reason.
When your insurer does non-renew your policy, it’s time shop for new auto coverage. Fortunately, there are plenty of insurers out there from which you can choose.
And when you are shopping? Make sure to ask about insurers’ non-renewal policies, including how many days notice they’ll provide you if they decide against renewing your policy.