What is the difference between cancellation and non-renewal?

Cancellation and non-renewal are two very different ways that a policy can be terminated. If a policy is cancelled, this is typically due to a fault on the behalf of the policy holder such as, they have failed to pay their premium or some type of fraud or inaccuracy has been uncovered in the policyholder's application. This can happen at any time during the normal policy period. If cancellation occurs, this may affect the policyholder's insurance score and therefore cause them to pay higher premiums down the road.

Non-renewal occurs when a policyholder or an insurer decides for whatever reason to not continue the policy at the end of the policy effective date. If an insurer chooses to non-renew a policy this may be due to the fact that they have discontinued offering that type of business or because they may no longer be offering coverage in that area. Non-renewal of a policy is not anyone's fault; therefore a policy holder will not necessarily be charged higher premiums with another company.

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