Homeowners Insurance Information

What's the Difference Between Cancellation and Non-Renewal?

There is a big difference between an insurance company canceling a policy and choosing not to renew it. Insurance companies cannot cancel a policy that has been in force for more than 60 days except when:

• You fail to pay the premium
• You have committed fraud or made serious misrepresentations on your application.

Nonrenewal is a different matter. Either you or your insurance company can decide not to renew the policy when it expires. Depending on the state you live in, your insurance company must give you a certain number of days' notice and explain the reason for not renewing before it can drop your policy. For instance, if you did something that raised the insurance company’s risk considerably, the premium may rise or you may not be renewed.

Additional explanations for a non-renewal can include a company’s choice to drop a particular line of insurance or to write fewer policies where you live, meaning the non-renewal decision may not be because of something you did.

If you believe the insurance company’s reasons for non-renewal are unfair, or if you want a further explanation, contact the insurance company's consumer affairs division for more information. If after taking this step you still believe you’ve not received a satisfactory explanation, call your state insurance bureau to discuss the legalities of the situation

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Information provided with permission from the Insurance Information Institute, Inc.