USA - Insurance : Quotes

Is there a difference between cancellation and non-renewal?

Last Updated: Thursday, February 9, 2012

When you want to avail of an insurance policy from USA insurance organization then you need to know the technical words employed in insurance contracts. If you make a decision to cancel your contract you could do so. And if you pick not to renew it you might also do so. The question now arises, "Is there a difference between cancellation and non-renewal of insurance contracts?"
 
The answer is affirmative. There is a big difference between cancellation and non-renewal of contracts. There are two ways in cancelling contracts – each by you, the insured, and by the insurance firm. If and when you feel that you do not need the policy anymore and you decide not to continue such policy, then you can cancel your agreement with the company by informing the latter of your decision in writing. You could also obtain a refund, and you might not, depending on the conditions laid out in the insurance contract, but as a general rule, if you paid the full amount in advance then you are entitled to collect the unused portion of the premium.
 
There are also instances where the insurance firm will be the one who choose on whether to cancel the contract. If you fail to pay the monthly premium as stipulated in the insurance policy, then the firm might or might not cancel the contract. It is their discretion to give you a chance and give you time to pay the unpaid premiums or to right away cancel the contract. As an impact of the cancellation of the contract by the firm, it leaves you with no insurance. When you have this type of record with one insurance business, logically, the other insurance organizations, if you apply for their insurance policy, will have doubts as regards to your capacity to make those deadlines to pay the premium. In short, you are now blacklisted in the insurance organizations because of your inability to make the payments on time.
 
Non-renewal of an insurance policy is a different thing. When your contract expires, and you opted for the insurance policy of yet another business, the mere act of ignoring the renewal agreement is not a valid way of not renewing the contract. If you do not communicate your non-renewal of the policy then the renewal will be automatic and it will be regarded as a valid renewal of the policy. Just like cancelling the policy, you should communicate your choice of not renewing the policy in writing. The organization may also have the discretion not to renew your contract. Nonetheless, the refusal of the business to renew your policy does not take instant effect. It only takes impact once your policy has expired.
 
When the organization decides to cancel or not to renew your contract, they are required by law to notify you in writing. They are not required to state the reason of their decision but you could ask for some explanation in writing. The choice of the business for non-renewal does not mean that you have done something wrong. It might be that they have decided not to continue their policy on places that you are covered for.
 
A reminder, cancellation and non-renewal are two diverse things. As they are different from each other they also create distinct effects as stated in the preceding paragraphs. Just before you determine to cancel, or not to renew the policy, make certain you have reasons and make certain that you do it legally.