It is important for drivers to understand the concepts of Motor Vehicle Insurance policy non-renewal and cancellation. Either can inhibit one’s driving ability and keeping insurance in effect is one of a driver’s main responsibilities. Although most drivers are careful to keep their records clean and their premiums paid on time, it’s common for some to fail on either count. If insurance does lapse, drivers should know the differences between non-renewal and cancellation.
The Differences Between Non-Renewal and Cancellation of an Insurance Policy
The non-renewal of an insurance policy happens when the insurance company declines to renew a customer’s policy because they believe it’s not worth the additional risk. Excessive claims or a poor driving record can bring about such a decision, but customers are typically notified a month ahead of the non-renewal. Subsequent insurance carriers don’t like insuring those who’ve been dropped, and it may be in the customer’s best interest to appeal the decision.
Cancellations are usually more serious, and they can happen due to any violation of the insurance contract. Whether a person pays late, is arrested for DUI, or commits insurance fraud, many insurers retain the right to cancel policies at any time. The company must give the customer notice, but it’s still possible for a driver to find themselves struggling to avoid a lapse.
If either one of these scenarios occurs, it is important to get covered quickly. It’s illegal to drive without Motor Vehicle Insurance coverage. Shopping around is the best approach, but those who are deemed uninsurable may have to turn to their state’s assigned risk insurance plan.
How to Avoid Non-Renewal or Cancellation
The easiest way for a driver to avoid a non-renewal or a cancellation is to set up automatic payments. Most banks allow customers to pay bills automatically, using a savings account as a backup funding source. However, if the issue is related to one’s driving record, higher rates or cancellation may be unavoidable.
Customers who want to learn about finding a new policy should consult an insurance agent. Perdue Insurance Group can explain whether there’s a grace period after a missed payment, and they can also explain the consequences of non-renewal and cancellation.
