UPDATED: Mar 13, 2020
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Failing to renew your car insurance can lead to serious consequences. Car insurance non-renewal can increase premiums in the future. It can leave you uncovered. It can lead to serious financial and legal problems. For all of these reasons, it’s in your best interest to ensure your car insurance is renewed and avoid non-renewal.
Today, we’re explaining everything you need to know about how to ensure car insurance renewal and avoid non-renewal.
How Car Insurance Renewal Works
With most car insurance plans, your car insurance will automatically be renewed at the end of your insurance contract. Some car insurance contracts last 6 months. Others last 12 months. At the end of this period, your car insurance should be renewed automatically, leaving you with no lapse in coverage.
Unfortunately, there are a number of reasons why car insurance may not be renewed. A car insurance non-renewal may occur if you have made multiple at-fault claims on your car insurance policy over the last 6 or 12 months, for example. Or, a car insurance company might fail to renew your policy due to your poor driving record, missed payments, or an out-of-state-move.
Why Would a Car Insurance Company Fail to Renew My Car Insurance?
Some of the reasons why a car insurance company may fail to renew car insurance can include:
Poor Driving Record: A car insurance company will rarely cancel your entire car insurance policy. However, they might fail to renew your policy if you have a particularly bad driving record. If you have been convicted of multiple DUIs or speeding tickets since you first signed up for your policy, then your car insurance provider might fail to renew your policy. In this case, you might be able to renew your car insurance with the same provider – but at a different risk level and premium rate. In other cases, your driving record might be so poor that you need to buy special high-risk car insurance.
Multiple Claims: Your car insurance company might fail to renew your car insurance if you have a history of making multiple at-fault claims. Insurance companies have different rules regarding how many claims it takes before canceling your policy. However, you generally do not want to have more than three at-fault claims within three years of each other. If you have accumulated multiple at-fault insurance claims in a short period of time, then you might receive a non-renewal letter from your insurance carrier.
Moving Out of State: Many insurance companies are only licensed to provide insurance in one state. If you move to a new state, then you need to get insurance in the state where you reside. If you notified your insurance company of your out-of-state move, then you may receive a letter of non-renewal from your insurance company. Sometimes, the post office may also notify your insurance carrier of the move. Don’t be surprised if you receive a letter of non-renewal after moving to a new state.
Problems with Payment: Maybe you couldn’t pay your insurance premiums on time. Maybe you were consistently late with payments. If a car insurance company frequently struggles to get payment from you, then it can lead to a letter of non-renewal.
Why is Car Insurance Non-Renewal a Problem?
If you receive a letter of non-renewal from your car insurance company, then it means your insurance policy with that company will not be renewed. Typically, it does not mean that your insurance policy will be canceled. Instead, it means your policy will not be renewed when it is set to expire. Most insurance companies will deliver a letter of non-renewal months before your policy expires, giving you plenty of warning to avoid a lapse in coverage.
Some of the problems with car insurance non-renewal include:
You Could Have a Lapse in Coverage
The first and biggest problem with car insurance non-renewal is that it could lead to a lapse in coverage. Car insurance non-renewal can cause your car insurance policy to lapse. A “lapse” is a break between car insurance policies. If your car insurance policy lapses, then you are no longer covered when driving. You may be driving illegally. If you are pulled over, you may face fines for driving without insurance. Your car may be towed.
Worse, if you get into an accident while your car insurance is lapsed, it could make you liable for huge financial and legal consequences. If you cause an accident that leads to $100,000 in medical bills, for example, then you might be required to pay that full amount out of pocket. Normally, car insurance would cover your liability in this situation. Because your insurance lapsed, however, you don’t have coverage.
You Will Pay Higher Premiums
Non-renewal of a car insurance policy could lead to higher premiums in the future. Typically, car insurance companies want to keep clients as customers. They want to continue making money from you. They don’t want to cancel your policy or watch you switch to a different provider. If a car insurance company has sent you a letter of non-renewal, it could mean you’re a high-risk driver.
Some letters of non-renewal are sent after multiple at-fault incidents, for example, or a large number of claims in a short period of time. In this case, your car insurance policy will be canceled with your current provider. You might be forced to use a high-risk car insurance company. You will pay higher premiums.
How to Avoid Non-Renewal
Obviously, the best way to avoid non-renewal is to:
- Avoid causing accidents
- Avoid making too many claims on your car insurance policy
- Make car insurance payments on-time
Sometimes, unfortunately, things are outside of your control. If you already have problems on your driving record, and you have already received a letter of non-renewal, then your next best step is to:
- Contact your car insurance company or insurance agent
If you suspect you are about to receive a letter of non-renewal, then you may wish to call your car insurance company or your insurance agent. They can clarify the reasons for the non-renewal. They can also explain the next step.
Alternatively, if you have already received the letter, then the letter should have further instructions on how to proceed. You may be able to dispute the non-renewal, for example, and successfully renew your car insurance.
Sometimes, your car insurance company will still plan on canceling your policy. In that case, start shopping for new car insurance.
Get New Car Insurance on the Same Day as your Renewal
If your car insurance company plans to cancel your policy, then you need to find new car insurance. Start shopping around for car insurance providers.
If you have a history of making at-fault claims, or if you have multiple convictions on your driving record, then you may be forced to use a high-risk car insurance company. Your insurance application may be denied from major providers. In most cases, however, you will simply have to pay higher premiums. It’s in the insurance company’s best interest to have drivers of all risk levels in its insurance pool.
The final step to remember is to switch insurance carriers on the same day as your renewal or before.
Your car insurance will expire at 12:01am on the date of expiration. That means if you want to avoid a lapse in insurance coverage, then your new policy needs to start on the same date your old policy expires.
Conclusion: Take Non-Renewals Seriously
If you have received a letter of non-renewal from your car insurance company, then you need to take that letter seriously. You can attempt to renew your policy with your current carrier. Or, you can compare car insurance quotes online and switch to a new carrier. If you ignore your non-renewal letter, however, then you will be left without insurance once your current policy expires, leading to a lapse in coverage that can have enormous legal and financial consequences.
For all of these reasons, we recommend taking non-renewals seriously. Follow the guide above to avoid non-renewal and ensure your car insurance policy gets renewed.