Every insurance policy has a term, or length of time that your property is protected by your insurer. I’ve written about reasons why your insurance can drop you during your term. But in this article, I’ll cover reasons your insurer might decide not to keep you as a customer once that term ends.
- What Does Non-Renewal Mean in Insurance?
- Why Isn’t My Insurance Being Renewed?
- How Can I Get Insurance After a Non-Renewal?
This article was written in May 2023 and I review it every three months.
What Does Non-Renewal Mean in Insurance?
A non-renewal happens when an insurance company decides to discontinue a policy at the end of its current term. Term length varies based on the type of insurance and what you choose when buying a policy. For example, home insurance terms are typically one year while auto insurance terms are usually six or twelve months.
Non-renewals can be confused with cancellations since both result in losing coverage. You can read more about the difference between a policy cancellation and non-renewal here, but one important difference is when your coverage will end. With a non-renewal, you will keep coverage through the end of the policy.
Why Isn’t My Insurance Being Renewed?
Many reasons for non-renewal can be grouped into one of the following:
1. Your Risk Increases
Insurance companies constantly evaluate the likelihood of things going wrong for insured members. Anything that can cause damages, loss or bodily harm is considered a risk. And the more risks your insurer identifies, the higher their risk of financial loss. There are many ways your risk can increase, but a big one is filing too many claims.
Money expert Clark Howard warns that insurers “punish you so much for making a homeowners insurance claim.” This is partly because once you file a claim, insurers think you’re more likely to file more claims down the line.
Filing small claims can result in surcharges on your premium for years (claims stay on your C.L.U.E. report for up to seven years). You can also lose discounts you would otherwise qualify for, be targeted for nonrenewal, and then might face challenges getting a policy with a new company.
“The key is: you want to think of homeowners insurance as being for catastrophes only. You don’t want to think of it as being used for a routine kind of ‘oops’ that happens at your home.”
Filing claims isn’t the only way to increase your risk though. Some things you do – or don’t do – to your property can increase your risk. Adding features to your home (like trampolines or swimming pools), getting a dog whose breed is classified as aggressive, or not properly maintaining your home can result in non-renewals of home insurance. Getting one or more speeding tickets is a risk that can lead to non-renewals with auto insurance.
2. Your Insurer Needs More Information
Always review any documents your insurer sends you during your policy’s term. This will help make sure you don’t miss requests from your insurer. Sometimes, for example, companies may need information or documents to verify something for your policy. If they don’t get it, they might not renew your policy. In this situation, connect with your insurer as soon as possible because resolving outstanding requests may lead to a renewal.
3. Your Insurer Stops Offering Coverage
Just as insurance companies evaluate how risky individual members are, they also evaluate risks across city and state markets. This can lead to a company choosing not to offer certain types of coverage anymore or leaving entire markets completely. The insurance crisis in Florida is an example of homeowners insurance policies not being renewed as companies leave the Florida market.
If your policy isn’t being renewed, your insurance company will likely send a letter of explanation that tells you why. If they don’t or their explanation is unclear, the Insurance Information Institute (III) recommends calling your insurer’s consumer affairs department for answers. Then, if you still need support you can try your state’s insurance department.
How Can I Get Insurance After a Non-Renewal?
If your insurer decides not to renew your policy at the end of its term, state laws require the company to give you notice beforehand. How much time depends on where you live, but it’s meant to minimize the chances of your policy ending before a new policy takes effect.
When you receive a non-renewal notice, always review the explanation. Depending on the reason, you might be able to take action for your policy to be renewed. If there’s nothing you can do, don’t wait to look for new coverage. Not only is it risky to be without insurance, but lapses in coverage can lead to higher rates for some types of policies.
According to the III, “receiving a non-renewal doesn’t mean that your premium will go up or you will have a difficult time securing coverage with a new company.” But the reason for your non-renewal can impact how much it costs or how long it takes to get new coverage. Being risky to insure, for example, can lead to higher premiums or companies not offering you coverage.
Auto insurance is required by most states (and every state has laws on financial responsibility), so you’ll have lots of options to shop around and get the best policy for your needs and situation after a non-renewal. If you’re too risky for a standard policy from auto insurers, you might need to look for companies that offer nonstandard policies.
While home insurance might be required by your lender, it’s not required by law. So if you’re considered risky for home insurance, getting a new policy can be more challenging than with auto insurance. In this case, you might need to look into Fair Access to Insurance Requirements (FAIR) Plans or your mortgage lender may get you a force-placed insurance policy. FAIR Plans and force-placed policies should be last resorts though. You can read about different types of homeowners insurance policies here.
Insurance contracts typically last for six months or one year. A non-renewal means your insurer has decided not to continue offering you coverage once a contract ends.
This usually happens when a company decides you’re too risky to insure or no longer offers certain coverages. Sometimes there are actions you can take to turn a non-renewal around. If not, it’s important to look for new coverage as soon as you receive a non-renewal notice.
Depending on why your policy isn’t being renewed, finding new coverage may take time. Starting your search as soon as possible will prevent the added stress of going without coverage between one policy ending and a new one kicking in.