In some instances, you or your insurance company may want to end your coverage. You may have found a better deal and want to switch insurers, oryour insurance company may determine you’re too risky to cover. No matter the reason, it will take a cancellation or non-renewal to stop coverage. Here’s what those terms mean for you.

Cancellations

When a policy is canceled, it means you or the insurer ended it before the expiration date.

When you cancel your policy

You can cancel your policy at any time for any reason. If you plan to, make sure you have another policy lined up first. If you end your policy before you have a new one, there could be a lapse in coverage, and that could get you fined by your state. Even worse, if you drive with no policy and cause an accident, you could have to pay for any damages yourself.

If you paid your policy all at once and cancel it early, you should get a refund. There may be a fee, however, for ending your policybefore the expiration date. In some cases, this will be a flat rate fee. In other cases, it will be a percentage of the refunded amount. So if your policy was $1,000 for 1 year and you end it after 6 months, you would get $500 back if there’s no fee. But if your insurer charges a 10% fee, you’d only get $450 back.

When your insurer cancels your policy

Insurers don’t have as much flexibility to cancel your insurance. They can cancel your coverage for any reason at the start of your policy. Typically, this is true for the first 60 days or so, depending on the laws in your state. After that period, there’s only a small set of reasons they can use to end your policy early. Two examples are if you stop paying premiums or if your insurer found out you purposely gave the wrong information on your coverage application.

If your insurer cancels your policy, they may need to give you advanced notice. The notice period may be up to 30 days, depending on the laws in your state and the reason for the cancellation.

Non-Renewals

When a policy is non-renewed, it means you or the insurer decided not to extend it for another term.

When you non-renew your policy

The process is pretty straightforward if you do not want to renew a policy. Before the expiration date, you formally notify your insurer that you do not want to renew your policy with them. Similar to cancellations, you should make sure to have another policy lined up before the expiration date. If you don’t, it could cost you.

When your insurer non-renews your policy

As with cancellations, your insurer can non-renew your policy for only a handful of reasons. These are usually more lenient than the reasons for cancellations. For example, your policy could be non-renewed if you had too many claims. The set of acceptable reasons changes from state to state.

Typically, insurers have to give you 30 days notice that they’ll be non-renewing your policy. That gives you time to shop for a new one. The exact time frame changes from state to state.

Did You Know?

Cancellations for misinformation

In most states, car insurance companies can cancel your policy if they find out that you lied on your application for coverage.