It is time to consider a new auto insurance policy. You may hear terms such as policy cancellation and non-renewal. What do they mean? Are there implications to these that you should know about when it comes time to renew?
Car insurance cancellation and non-renewal are two different things. Both are important to understand as you go into changing your policy. There are a few things you should consider when it comes to choosing how to handle an existing policy, too. 
What Is Cancellation?
Cancellation occurs when the insurer decides to terminate your car insurance. It is possible for them to do so for most any reason during the first 60 days of maintaining coverage. However, after that first 60 days, there are fewer opportunities for this to happen. The insurer might cancel your policy at any time if the following occurs:
You do not make your payments on time. You miss a premium payment. Sometimes, insurers allow leeway and one forgiveness payment.
Your driver's license is no longer in good standing. The department of motor vehicles revokes or suspends it for any reason.
You commit fraud in some way. You misrepresented yourself in some way when applying for or obtaining auto insurance.
When this happens, the insurer has the right to cancel the policy. This means you do not have coverage. You cannot file a claim. In many cases, continuing to drive without car insurance is breaking state law.
What Is Nonrenewal?
Either you or your car insurance company can decide not to renew the coverage after the policy expires. Most often, the insurer will send a letter in the mail outlining its decision not to renew your policy. The insurer may or may not have to provide you with a reason for not renewing your policy. They will likely give you a number of days until the policy and coverage are no longer applicable. State laws govern the actual process here.
There are many reasons this may occur. For example, the insurer may decide not to cover you because of high-risk situations, such as drunk driving. If you have multiple tickets while insured by the agency, it may no longer wish to cover you. It has the right to do so.
Auto insurance companies do not cancel policies often. There generally is plenty of reason why this may occur. But, remember, you can elect to not renew your policy, too. You may wish to do this if you are looking for different coverage. It may be beneficial if you find a policy with lower costs or better coverage levels, too.