When it comes to your business insurance, it’s important to have the right coverages. But what does it mean if your policy is nonrenewed or canceled? They might sound the same, and it might seem like they have the same outcome – you don’t have business insurance – but they’re actually two different things and happen for different reasons.
So, let’s take a look at what these two scenarios mean for your business.
Scenario #1: Nonrenewal.
If your policy is nonrenewed, that means that either you or your insurance company has decided not to renew, or continue, your policy when it expires. If it’s the insurance company that decides this and not you, it can be a bummer. However, based on your state’s laws, they have to give you plenty of notice. So, you’ll still have plenty of time to find a new carrier.
Why won’t they renew me?
It might seem like a bit of a slap in the face if your company up and leaves you, but there are a few reasons that they might have done this.
They don’t carry that coverage anymore.
If you have a particular line of coverage, your insurance carrier might have decided that they aren’t going to write, or offer, that kind of insurance anymore. It might have become too risky for them. So, it’s nothing personal. They just don’t carry that product anymore.
The company might have decided to write fewer policies for that type of coverage.
Don’t feel bad about your nonrenewal. You’re not the only one who didn’t make the cut. They’re just reducing the number of policies they’re writing for that kind of coverage.
The insurance company decided not to write your business anymore.
It’s possible that your business did something that made the risk for the insurance company go up. Insurance companies don’t like risk, so they might have decided to not renew your policy. You might have filed too many claims. This is why it’s important to know how to control your liability risks.
So, that’s nonrenewal in a nutshell!
Scenario #2: Cancellation.
If your policy is going to be canceled, you’ll get plenty of notice. Your insurance company won’t just leave you in the lurch with no time to explore other insurance options – that would be bad form.
There are different laws for different states about the cancellation of insurance policies, but generally there are only a handful of reasons that an insurance company can cancel your policy if it’s been in effect for more than 60 days.
You don’t pay the premium.
This one’s logic. The insurance company expects to be paid for the services and coverage they’re providing you. It’s business. If you’re finding that your rate is too high and has become burdensome, you can explore ways to lower your business insurance premium.
This isn’t the end of the world, though. You might be able to get your coverage back if you pay an entire year’s worth of premiums upfront. However, if this isn’t an option for your business for whatever reason, you might have to hunt down a high-risk policy.
You committed insurance fraud.
This is kind of an awkward situation. Insurers don’t like having the wool pulled over their eyes. No one likes to be deceived. So, be on the lookout for accidental or unintentional insurance fraud and be honest with your agent.
You weren’t completely honest about your business on your insurance application.
Again, insurers don’t like to be lied to. Make sure that you tell the whole truth and nothing but the truth about your business with your agent. Honesty is the best policy when it comes to legally binding documents. If your insurance company finds out that you fudged the truth on your application, they have grounds to cancel your policy. And they won’t hesitate to do it.
Keep in mind that if your policy is canceled, it might be difficult for you to get another company to write for you. Again, insurance companies don’t like risk.
If you have any questions about nonrenewal or cancellation, we’d be happy to answer those for you! We’re here for you and we’d love the opportunity to help you with any of your insurance needs. To get a free quote on your business insurance, all you have to do is fill out our quote form. It doesn’t take long at all.