What does "nonrenewal" signify in insurance?

Nonrenewal in insurance refers specifically to the decision made by the insurer not to extend the policy at its expiration. This means that once the current term of the policy comes to an end, the insurance coverage will not continue, and the insured party will need to seek a new policy if they still require coverage. Nonrenewal can occur for various reasons, such as changes in the risk profile, the insured party's claims history, or company policy changes.

Understanding nonrenewal is crucial for policyholders because it impacts their ongoing insurance coverage and may necessitate finding alternative options in a timely manner. Unlike cancellation, which terminates the policy before the expiration date for reasons like non-payment or fraud, nonrenewal takes effect only at the end of the policy term. Furthermore, it does not pertain to specific adjustments in premium amounts, as may be suggested in other options.