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How to Ensure Car Insurance Renewal

Car insurance is a requirement in most states and affords the driver an essential protection in the case of an accident. For example, if you hit another driver and don't have insurance, you could face thousands of dollars in damages and could even be sued for your assets. For this reason, it's extremely important to maintain a current auto insurance policy.

Some scenarios can prompt a car insurance company to choose to non-renew a policy; however, you can take steps to ensure your car insurance policy gets renewed.

Why Do Car Insurance Companies Deny Renewal?

Car insurance companies are not in the business of losing money. This is why high-risk drivers―an insurance term for motorists with poor driving records―are penalized with either:

  • Steep insurance premiums.
  • Auto insurance non renewal.
  • Auto insurance cancellation.

Each auto insurance company maintains different policies regarding non-renewal, but, in general, most insurers will deny renewal for the following reasons:

  • Many traffic tickets or other moving violations on your driving record.
    • Insurance companies generally view your driving record for the past 3 to 5 years; however, this will vary by company and state.
      • NOTE: Insurance companies pay attention to patterns. For instance, if your provider notices a succession of speeding tickets, your car insurance company may deem you as too high of a risk to insure.
  • A high number of at-fault accidents.
  • Serious violations, such as DUI/DWI.
  • Filing too many accident claims, regardless of fault and severity.
    • Insurance companies maintain "claims records," which are similar to driving records, except these records track a driver's claims history.
  • Delinquent premium payments.
    • NOTE: This can also result in cancellation, depending on the instance of nonpayment, the company, and your state.

It's important to remember that when you get a ticket or commit a serious violation, you can face serious consequences such as fines and even a suspended license. However, the toughest penalty may be the one you don't see. It might not take effect until weeks, sometimes months, after your mistake, arriving in the form of a renewal rejection notice from your car insurance company.

Is Nonrenewal the Same as Cancellation?

You can be denied car insurance coverage either by:

  • Non-renewal.
  • Cancellation.

Car Insurance Nonrenewal

Nonrenewal notification occurs as your current car insurance coverage approaches expiration. If an insurer decides to nonrenew, it is usually because they see you as too high-risk to continue covering. For example, if you filed 3 claims in a one-year period, you might expect to your provider not to renew your car insurance.

Insurance companies see past non-renewal as more minor than cancellation.

NOTE: State laws vary regarding nonrenewal notification; however, you are typically provided between 10 and 30 days notice.

Car Insurance Cancellation

Cancellation is more serious in the eyes of insurance companies, meaning that if your policy is cancelled, it can be difficult for you to get insurance in the future.

Generally, there is a window at the beginning of your policy (e.g., 60 days) in which your insurance company can cancel your car insurance for any reason.

After that period has passed, your policy can only be cancelled for specific reasons, such as:

  • Evidence that you lied about or misrepresented material information to the company.
    • Example: You did not include the fact that you had driver's license suspension on your application.
  • Nonpayment of premium.

State laws and company policies vary, but you'll usually be given 10-30 days notice of cancellation.

What to Do if Your Car Insurance Is Not Renewed

By law, you must maintain a minimum amount of car insurance (or a state-approved alternative) in order to legally drive. So if you're denied car insurance renewal, you have two options:

  1. Request written notice of reason for nonrenewal and challenge the decision if you believe it is unfair.
  2. Find another provider as soon as possible.

How to Avoid Nonrenewal

Consider these tips:

  • Maintain a clean driving record. This means avoiding traffic violations.
  • Take a defensive driving class if you have a poor driving record.
    • This will convey to your insurance provider sincere intentions of becoming a safer driver, and can even help you remove points from your record (which can mean more affordable auto insurance).
  • Pay your auto insurance premiums on time and avoid a lapse in coverage.
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