When it comes to insurance terms, many are easily confused. Two of the terms that are often misconstrued are cancellation and nonrenewal. Despite what you may believe, they have two very different meanings. In fact, unless you have failed to pay your insurance premium on time, committed fraud, falsifying information on your application or have had your driver’s license suspended or revoked, an insurance company cannot legally cancel a policy that has been in force for over 60 days.
However, the insurance company can choose not to renew your insurance policy. When your policy expires, you have the option of not renewing your policy, as does the insurance company. If your insurance company decides that they do not wish to renew your policy, they are required by state law to inform you of such action within a certain numbers of days of your policy expiration date. They are also required to provide a proper explanation as to why they are not renewing your policy. In many cases, you may have done nothing wrong and the cancellation is due to company changes.
The terms can easily be misleading, but the definitions of cancellation and nonrenewal are straightforward. Keep in mind that just because your insurance company decided to not renew your policy or to cancel your policy does not necessarily mean that you’ll be forced to pay a higher premium at another insurance company nor does it mean that you will not be able to obtain insurance from another local insurance provider.
To learn more about auto insurance in the Greater Phoenix area, please contact Phocus Companies today!
