Cancellation and non Rewewal of Policies

Insurance coverage can cease for a policyholder for any number of reasons. The most common though is a cancellation or non-renewal by the insurance company. Each is caused by different circumstances but the result is still the same. An insurance policy can also be canceled by the policyholder at any time by notifying the insurer.

One way in which insurance coverage can cease for a policyholder is when the policy is canceled by the insurer. There are many reasons why an insurer would cancel an insurance policy. One reason is because of non-payment of premium. Another reason that an insurer would cancel a policy is for a misrepresentation of a material fact. This can include providing inaccurate information on the application for insurance as well as filing a false claim. An insurance company generally will not cancel a policy unless there is sufficient reason. In the event a policy is canceled because of non-payment of premium the policy can be reinstated once the back premium has been paid.

Another way in which insurance coverage can cease for a policyholder is when an insurer decides to non-renew the policy. An insurer can decline to non-renew an insurance policy for any number of reasons but they are required to give at least sixty days notice before doing so. There are many reasons why an insurer will not renew a policy. The insurer may decide to withdraw from a particular market or no longer insure people with a certain number of losses. An insurance company may also decide to no longer offer a particular type of policy. Usually these decisions are company wide and affect an entire area or group of people and not one person in particular.

When an insurance company decides to cease coverage by either canceling or non-renewing a policy the result is still the same. The insured will no longer have coverage and needs to find a new insurance policy. Unlike a renewal where the policy is still in force until it expires a cancellation will result in the return of any unearned premium. That is any premium that is left when the policy was canceled by the insurer. Depending on where an insured lives and the type of insurance that is needed finding a replacement policy might be difficult. This is especially true if there are not that many insurance companies that offer a specific type of policy.

Unlike a policy cancellation by an insurance company a policy can be canceled by the insured at any time. When a policy is canceled by an insured the insurance company will return any excess premium that is due. When canceling an insurance policy always make sure to already have replacement coverage in place.