In most cases, an auto insurance company will automatically renew a policyholder's auto insurance policy when the policy is about to end, but there are times when this does not happen. Instead, an auto insurance company might make the decision to not renew the policy, and this is called non-renewal. If you are wondering what this means and why it happens, continue reading to learn more.
What Does Non-Renewal Mean with an Auto Insurance Policy?
Non-renewal is a term used by insurance companies when they make the decision to stop offering coverage to a current policyholder. Basically, it means that you can no longer get coverage with the insurance company you were using. You would receive a letter in the mail that notifies you about this decision several weeks before your policy is scheduled to end. You will have insurance coverage with your current company until the date your policy ends, but you would not have the option to continue buying your insurance from this company after the date your policy ends.
Why Does This Occur?
An insurance company will usually decide to not renew a policy when a driver becomes too much of a risk to them. For example, if a driver gets a DUI, the insurance company might no longer be willing to offer coverage to this person. If this is the case, they would choose to not renew the policy. This is the most common reason that insurance companies use non-renewals with their current customers, but there is also a chance that an insurance company could do this for a different reason.
What Are Your Next Steps After Receiving a Letter of Non-Renewal?
If you ever find yourself in a position where your insurance company is not willing to renew your policy, you will need to start your search for a new insurance policy right away. If your company is not willing to offer you insurance, you might have trouble finding a company that will; however, if you keep looking, you will find one. You should expect to pay higher rates for your coverage, but these higher rates will not last forever. If you can continue driving without causing any accidents or getting any new driving violations, your rates will drop in the future.
Finding a new company after getting notice of a non-renewal will be your main goal, as you need auto insurance. Contact an insurance company that sells auto insurance to start the process of finding a new policy.
