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What Can I Do When My Insurance Is “Non-Renewed?”

It looks like a regular envelope from your insurance company.  Perhaps it is your premium renewal notice for the upcoming term, but it seems too early for that, so you open it up:

You are hereby notified in accordance with the terms of the above mentioned insurance policy that the above mentioned insurance policy will expire effective at and from the hour and date mentioned above and the policy will NOT be renewed for the reason(s) stated in the “Important Notices” section.  See the “Important Notices” section for other information that may apply. (see a sample non-renewal notice here)

You have just received the dreaded non-renewal notice on your insurance policy.  So what now?

Non-renewals and cancellations are not the same.

The good news is, there probably isn’t much reason to worry about finding new coverage.  You may view this document as a cancellation of your insurance policy, but cancellations and non-renewals are different in several ways.

A) When the policy end date occurs.

Cancellations may be sent any time during the policy period and notice can range anywhere from 10 days (for nonpayment) to 30 days (for any other reason). A non-renewal is typically sent just prior to the end of the policy term.  State laws generally requires that an insured be given anywhere from 30 to 90 days notice that a policy will not be renewed, and those requirements will be stated in the policy form.

B) Why the policy end date occurs.

Cancellation is generally considered to be an insured-triggered event, meaning the insured didn’t pay the policy premium or failed to provide proper and complete information during the underwriting process, or the client decides to cancel the policy and go with another carrier.  Non-renewals are generally company-triggered events, many of which are discuss further in this article.

C) The effect on your premium with the new insurance carrier.

The reason for a cancellation can indicate to an insurance carrier that an insured may not be the best risk due to either claims, premium nonpayment issues or underwriting reasons, which can negatively impact the carrier’s desire to insure the client.  This can lead to higher deductibles, higher premiums and/or higher down payments for premium financing.  A non-renewal usually has little to no impact on an insured’s ability to secure reasonably priced coverage on the open market.

Consider Why Your Policy Was Non-Renewed

The reason an insurance company non-renews a policy will be listed either on the Cancellation or Non-Renewal document, or in the cancellation/non-renewal letter they send to the insured.  There are many different reasons that a policy would be nonrenewed by an insurance company, and only a few of them would be driven by the insured.  Here are just a few:

1.  The company decides to stop writing insurance in your state.

2.  The company decides to stop the line of business (liability, property, auto, or any other) in your state.

3.  The company decides to stop writing your business (plumbing, retail, etc.) in your state.

Insurance companies usually decide not to write business in a state due to regulatory issues, or lack of profitability with either a line of coverage or a business sector.  Sometimes insurance companies even go out of business entirely, though this is rare.

Sometimes an insurance company will non-renew coverage for an insured-driven reason such as frequency or severity of claims, making the decision to stay on the policy until the end of the term.  This type of non-renewal can impact premium with a new carrier.

What Are You Going to Do About It?

If you are insured directly through an insurance company, you should immediately contact the insurance company to find out if there are plans to replace your insurance coverage through another carrier under their company umbrella.  Sometimes this is possible, but you should always check to make sure that this is the plan.  While your direct writer is working on another solution, this might be a good time to contact a local independent agent to see what services and companies they may be able to offer.

If you are insured through a local independent agent, be sure to contact your agent as soon as you receive the notice.  Some agents may require additional information to market your policy to other insurance companies, and the more time you have to gather that information, the better your chances are of securing affordable replacement coverage prior to the end date of your current policy.

Take note:  Any additional insureds or loss payees on your policy such as contractors, banks or lien holders, will also be notified of the policy non-renewal in accordance with the policy terms and conditions.  Contacting your agent or insurance carrier as soon as possible will help make the transition for these interested policies much smoother.

A non-renewal notice is not necessarily going to blackball you in the insurance industry.  It might even open up other opportunities for expanded coverage through a carrier or agent you never considered before.

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