Knowing insurance-related jargon is crucial and handy, especially when you plan to file your insurance claim. For example, if you plan to raise a Tata AIG car insurance claim, you must understand a few terminologies, the inclusion and exclusions, etc., to ensure that your claim does not get rejected.
4-wheeler insurance renewal and car insurance cancellation are two such processes that often cause confusion. In this article, we will examine the difference between the cancellation and non-renewal of car insurance, shedding light on different aspects of each.
What is Non-Renewal of Car Insurance?
Firstly, the non-renewal of car insurance is the refusal to renew the policy. It can be a random or thoughtful decision where the insured decides that he doesn’t wish to renew his car insurance policy. It can either be done by the insurer or the policyholder.
It happens when you or the insurance company discontinues the car insurance policy at the end of the coverage period. It can happen with or without a valid reason but with a notice period before your policy ends.
Reasons for Non-Renewal of Car Insurance
There can be a number of reasons for non-renewal of your car insurance
1. Illegal engagement-
If you engage in some kind of illegal activity, such as wrong driving practice, insurers choose not to renew your policy when it expires.
2. Caught driving rash-
If your driving record shows too many speeding tickets, your insurance provider will choose not to renew the policy.
3. Overuse of claims
If you overuse a claim, i.e., involved in frequent accidents, the insurer may opt for non-renewal of your car insurance. Since such situations are considered high-risk situations, insurers may choose not to renew your policy.
4. Relocation
If you relocate due to a job or shift to a high-risk area which is not covered under your insurance policy therefore, your provider may choose not to renew your policy.
5. Discontinued specific coverage
Suppose your four-wheeler insurance provider discontinues a particular coverage plan with an updated plan. In that case, you may choose not to renew your current car insurance plan and go for a better plan instead.
What is Cancellation of Car Insurance?
Cancellation of car insurance can happen at any time during the policy term or at the end of the policy period. Cancellation refers to the termination of the policy, which happens by either of the parties due to a specific reason.
In most cases, the insurance company takes action. However, remember that a car insurance provider cannot cancel a policy that has been in force for the mentioned number of days specified in your policy.
Reasons for Cancellation of Car Insurance Policy
| Reasons for Cancellation | Insurer Initiated | Insured Initiated |
| History of unsafe driving | Yes | No |
| Suspension of car registration | Yes | No |
| Deceptive claims | Yes | No |
| Hiding information | Yes | No |
| Impairing medical conditions | Yes | No |
| Sudden relocation | No | Yes |
| If you no longer drive | No | Yes |
| Choosing another insurance policy or provider | No | Yes |
| If your vehicle is stolen or lost | No | Yes |
| Vehicle sale | No | Yes |
Difference Between Non-renewal and Cancellation of Car Insurance Policy
| Parameters | Car Insurance Non-Renewal | Car Insurance Cancellation |
| Policy Premium | There is no direct impact on the policy premium in the following policy year if it is not renewed within a particular period, i.e., usually 90 days after expiry.
Although there is a possibility that you may lose NCB and other benefits. The policy premiums for new policies may have increased. |
Cancelling before expiry and buying a new car insurance policy may result in a higher premium from the new insurer. |
| Options to Buy Back | If you do not renew your car insurance policy, you can later buy the same or a different policy from the same insurance company. | When you cancel your insurance policy before expiry, you might be unable to repurchase the same car insurance policy, especially if the cancellation was initiated by the insurer. |
| Time of Initiation | You can choose not to renew after the original policy tenure has expired. | You or the insurer can initiate cancellation at any time during the policy term. |
Conclusion
You should be cautious enough not to let your car insurance be cancelled or face non-renewal. Now that we know the difference between the two terms make sure you always have a valid car insurance policy to safeguard you against accidents and fulfil the mandatory requirements.
Further, if you are planning to cancel your bike insurance or car insurance policy, ensure you are aware of the process offered by your insurer. Irrespective it is a car or bike insurance cancellation process, they both are generally available online, making it efficient and straightforward.
