When you look at your car insurance policy documents, you may not understand all the words you see. Car insurance jargon can be hard to wrap your head around. If you want to understand your policy’s conditions, you need to learn some key terms. Two car insurance phrases get confused often – policy non-renewal and policy cancellation. Let’s look at what each of these means and how they differ.
Your motor vehicle insurance policy comes with an end date. If you purchase a policy on 1st July 2021, it will expire on 30th June 2022. If you forget to renew your policy on or before 30th June the following year, it’s considered non-renewal. You may have a car insurance renewal grace period. During this time, you can still renew an expired car insurance policy and continue to enjoy your No-Claim Bonus (NCB). Both insurance companies and policyholders can initiate non-renewal. Most often, the individual chooses non-renewal. Insurance companies rarely opt for non-renewal.
Vehicle insurance policy cancellation can happen at any time. It does not depend on the policy’s expiry date. Both insurance companies and policyholders can initiate the cancellation. Let’s look at why either party may choose to cancel a policy.
Reasons Why an Insurance Company May Cancel a Four-Wheeler Insurance Policy
Unsafe Driving History
Insurance companies may cancel an individual’s car insurance policy if they end up in several accidents within a short time. Accidents are an indicator of reckless driving, and insurance companies can choose to withdraw their coverage because of it.
Vehicles that are involved in illegal activities may get their registration suspended. Car insurance companies have every right to cancel an auto insurance policy when the four-wheeler’s registration number gets suspended.
Policyholders who attempt insurance fraud by filing false claims will likely get their policy cancelled. Insurance companies investigate every claim, and if they find anything amiss, they will reject the claim and cancel the car insurance policy entirely.
Incomplete or Incorrect Information
While purchasing insurance, you must provide a few details about yourself and the vehicle. If your insurance company finds out that you provided inaccurate or incomplete information, they can cancel the policy.
Reasons Why a Policyholder May Cancel their Car Insurance Policy
If you choose to sell your car and do not intend to purchase a new one, you can cancel your four-wheeler insurance policy.
Most car insurance companies operate in multiple cities, but you may have a policy from a local company. Before shifting, you can cancel the existing car insurance policy and buy a new one later.
Switch in Provider
You may decide to change your insurance company. Your existing policy may not offer adequate coverage, or you may find another insurance plan at a better rate. You can cancel your current policy and purchase the new one.
The main difference between non-renewal of insurance and cancellation lies in when the action happens. Non-renewal happens once a car insurance policy expires. A vehicle insurance policy cancellation can take place any time during the policy tenure. After a cancellation by an insurance company, it can be difficult for an individual to purchase a new four-wheeler insurance policy from the same insurance company. After a non-renewal, the individual can buy another policy without any hassles. If your car insurance policy is not renewed or gets cancelled, you need to rectify it. To get started on your car insurance renewal journey, you can visit the Edelweiss General Insurance website. Along with comprehensive coverage, we offer multiple add-ons that enhance your protection.