Understanding Nonrenewal in Insurance Policies
So what does nonrenewal mean for an insurance policy? It’s not the same as being cancelled. If you have an insurance policy that has a term to it—let’s say a typical homeowner’s policy might be a one-year term from May 2023 to May 2024—at the end of that term, you would renew your policy. It’s unlikely your policy would be cancelled during the term because, unless you do something wrong, like lie on your application, not pay a premium, or do something that violates the contract or breaches the terms, they would not cancel you mid-contract. They really can’t in most cases.

Difference Between Cancellation and Nonrenewal
However, at the end of the term, if it expires, it’s not considered to be cancelled if they don’t give you another insurance policy. It’s considered to be non-renewed because you would have to renew it anyway, and the rate could be different. It could have different terms and conditions.

Reasons for Nonrenewal
Why would an insurance company not renew you? If you specifically did something during that term, like had too many claims, maybe your risk went up, or maybe you changed your business, they can not renew you. Sometimes an insurance company will non-renew multiple policies in a market because they decide that geographic area they don’t want to be in, that type of risk they don’t want to insure, or that type of business they don’t cover anymore. They can generally not renew for those reasons.

Notice Period for Nonrenewal
Typically, in most states, you have to get some kind of notice for non-renewal a month or two in advance. It depends on the state and what kind of policy is in place. However, even if you don’t get a non-renewal notice, we recommend putting a note on your calendar for all of your important insurance policies—your homeowners, your business, and your corporate policies—to maybe 90 days before the policy is due to contact your agent or your insurer and ask them for updated quotes for the coming year.

Preparing for Potential Nonrenewal
You want to stick with your same insurance company if everything is good. You don’t want to be jumping insurance companies left and right. But if you know in advance that the rate’s going to go up a lot, or if they might not renew you, or maybe they’re going to have different terms, it gives you some time to shop around other companies. Because if you’re going to a new company, they might want more documentation than for renewal. They might want loss runs to show that you had no claims or what claims you did have. They may want CVs on the executives or financial statements, and if you need to get those in to get a new policy, it may take a month or two to get that in the works. So the earlier you start that, the better.

Action Steps in the Case of Nonrenewal
So if you’re thinking you might get non-renewed or you have been non-renewed, start the process of looking at other coverages as soon as you can to make sure you’re not uninsured for some period of time.