Car Insurance Non-Renewal Vs Cancellation

Getting to know about the cancellation or non-renewal notice of your motor insurance can be confusing. In such situations, it is important to understand the differences and similarities between the 2 adversities. Both lead to policy lapse but work in different ways. These terms sound vastly confusing and are used interchangeably, at times, however, serve different purposes.

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Above-mentioned prices are for a 7-year-old Maruti WAGON R AVANCE LXI (998 CC) registered in Gurgaon and 15 days before expiry of previous policy

What is Car Insurance Cancellation?

As the term suggests, car insurance cancellation refers to the termination of an insurance policy by the car insurance company or the policyholder at any given time before the termination of the policy period. 

While the policyholder possesses all the rights to cancel their car insurance policy at any given time before the policy period ends, the insurance company commonly cancels the policy under 3 common adversities: 

1. Concealment of information

2. Misrepresentation of facts 

3. Failed premium payments

The insurer will share a notice with the policyholder before canceling the car insurance policy by stating the appropriate reasons. 

Reasons for Car Insurance Cancellation

As discussed above, the insurance company holds all the right to cancel a car insurance policy in 3 common cases where you have been deemed to be at fault. However, there are still several other circumstances that might lead to your insurance company turning their heads away including: 

    • Bad or risky driving record: A consistent history of several car accidents at your fault within a period is considered a risky affair in the eyes of the insurance company that calls for a cancellation notice, at times. 
    • Suspended vehicle registration: Insurance company can cancel your insurance in case your vehicle’s registration has been suspended or revoked in case of illegal activities such as driving under the influence of alcohol or drugs.
  • Fraudulent claims: In case you are caught sharing false information or staging an accident to raise a claim, a car insurance policy stands at a high risk of being canceled by the insurer.
  • Concealment of information: In case you fail to provide crucial information about the car to the insurance company such as your vehicle is being used for commercial purposes, an insurer might cancel car policy.
  • Medical conditions: If you are diagnosed with a medical condition such as epilepsy that can impair your driving skills and the insurance company gets to know about it, they can cancel the car insurance policy.

What to Do If Your Car Insurance Is Cancelled?

In case a car insurance policy is to be canceled by the insurance company, it might get tough to obtain a new insurance policy from either the same or any other insurance company as the new companies may consider you as a riskier option.

There is very little that you can do in case your policy is being canceled in case you concealed crucial facts, staged an accident, or even misrepresented any important information. 

However, if you have received a policy cancellation notice because you failed to pay the premium for your insurance on time, you might have a chance to gain back your policy by paying the entire year’s premium amount in one go. If that is an option you can’t go with at that moment, then you would have to try with a new insurance company.

What is Car Insurance Non-Renewal?

Car insurance non-renewal refers to a refusal to renew the existing car insurance policy that has lapsed, either by the policyholder or the insurance company. The policyholder has all the right to not renew the policy without being legally obligated to furnish appropriate reasons. 

However, if the insurance company intends to not renew car insurance policy, they will be required to give notice before the expiry date of the policy and also state the reasons for not renewing the car insurance policy anymore.

Reasons for Car Insurance Non-Renewal?

There are several reasons that your insurance company can state while choosing to not renew your car insurance policy. Some instances may not even be related to you. For instance, the insurance company might drop the policy count to be distributed in your particular location in the next policy period or even decide to not supply any more car insurance services in your location. Other instances include:

  • Adverse claim history: In case you have filed multiple claims in the previous policy period, your insurer might choose to not renew your policy for the next period.
  • New car: If you have purchased a new vehicle, your company might not renew your existing motor insurance anymore
  • Relocation: If you have relocated to another state and the location does not fall under the ambit of the existing insurance coverage, your insurance company might not renew the policy again and ask you to buy a new car insurance policy
  • Fines/Challans: Attracting too many fines/challans showcases risky driving. Be it drunk driving, not following traffic signals, or even over-speeding, if your car has been caught with a lot of tickets, your insurance company might consider this as a high-risk situation and not renew your car insurance policy anymore.

Difference Between Car Insurance Non-Renewal and Cancellation

Following are the points of difference between car insurance non-renewal and car insurance cancellation

Difference

Car Insurance Non-Renewal

Car Insurance Cancellation

Period

Post the expiry period of the existing motor insurance

Can only be canceled by the insurer till 60 days from the date of the policy being in force

Penalty on premium

Does not affect the premium amount charged by the next insurer

The next insurance company might levy a higher premium amount as a penalty against the cancellation of your policy

Existing insurance company

You might be still eligible to purchase car insurance from the existing insurance company

The existing insurance company may refuse to provide a car insurance policy again

Conclusion

While it is clear that getting your car insurance canceled by the insurer is a comparatively serious issue than having it refused to be renewed again. Cancellation of existing motor insurance calls for penalizing behavior from future insurance companies. So make sure that you thoroughly compare car insurance from various insurance companies before proceeding to purchase one.

This will not only help you fetch the best rates for car insurance renewal but also help you choose the best and most appropriate insurance services for you. If you are looking forward to a hassle-free renewal process, you can visit the official website of Policybazaar Insurance Brokers Pvt. Ltd. For convenient car insurance renewal online. 

Written By: PolicyBazaar - Updated: 12 October 2021
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