What is the difference between a cancellation and a non-renewal?
A cancellation happens in the middle of the policy period. A non-renewal takes place at the anniversary or renewal date of the contract. Unlike cancellation, a company may non-renew a contract based upon underwriting criteria. Underwriting criteria are those specific requirements written into the company’s program. Claims frequency and driving record are examples of underwriting criteria used by companies when deciding whether to renew or non-renew a policy. A company must give 30 days notice for a nonrenewal. Both cancellation and non-renewal result in termination of the contract.
A cancellation happens in the middle of the policy period. A non-renewal takes place at the anniversary or renewal date of the contract. Unlike cancellation, a company may non-renew a contract based upon underwriting criteria. Underwriting criteria are those specific requirements written into the company’s program. Claims frequency is an example of underwriting criterion used by companies when deciding whether to renew or non-renew a policy. A company must give 45 days notice for a non-renewal. Both cancellation or non-renewal result in termination of a contract.
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