What's the difference between cancellation and non-renewable?

 
Homeowner’s insurance policy is a term contract that remains in effect between you and your insurance company for a fixed period of time. After the expiry of a term, you may decide not to renew the policy. The insurance company may also decide not to renew your policy further. In both the events, your relationship with the insurance company will come to an end. On the other hand, you or your insurer may cancel the policy and terminate the insurance contract. If you are not much aware of the homeowners’ insurance processes and the various terms associated with them, it will be of utter confusion for you to understand the implications properly.

 
The two terms ‘cancellation’ and ‘non-renewable’ have widely different meanings in the context of insurance. In the first instance, non-renewable occurs after the term of a contract is complete and before starting another term while cancellation may take place anytime during the term by either of the parties subject to some conditions.

 
Homeowners’ insurance and renters’ insurance, in general, are annual insurance policies. These policies must be renewed after completion of a term (a year). Renewal occurs when both you and the insurance company agree to continue the policy. However, either of the parties may decide not to continue the contract further and thus not renewing the policy. The insurance companies are there to serve the consumers and not all the existing customers of any company renew their policies. Therefore they only lose business when you don’t renew your policy. But when the insurance company doesn’t want to renew your policy? How do you feel? Shocked perhaps! Or surprised by such an action from a company you had been a client of! An insurance company can decide not to continue coverage after a policy term expires. In that case the company must notify the customers about its decision at least 30 days in advance of the date of expiry and also provide explanation about the reasons of such decision.

 
As a customer you might feel hurt by the unilateral decision of the insurance company or might find the explanations not satisfactory. In that case you can contact the consumer affairs division of the company and ask for further explanation. If your company fails to provide satisfactory explanations or if there are events of discrimination, you may even get in touch with the State Insurance department.

 
Being owner of your policy, you can cancel your policy whenever you may desire which often happens in the event of selling the property. The insurance company will refund the unused premium to you. However, not the full value will be refunded; instead the premium will be refunded at the “short rate”, which is less than the actual premium paid. The insurance company cannot cancel the policy if your policy is in force for more than 60 days. But if your policy remains in effect for 60 days, the company can cancel your policy if you fail to pay the insurance premium or you have furnished false information on the application.  

 
However if you miss to pay the premiums unknowingly the insurance company may reinsure you but most likely at higher premiums since you are viewed as a risk.

 
As it is important to have a homeowners’ insurance, so it is a responsibility of the policy owner to maintain it. Therefore you must renew your policy at regular intervals. If it is of utmost necessity to cancel a policy, make sure that you inform the company about the reason and also continue to maintain a good relation, because you may be in need of their service in future. Canceling a policy before the expiry term will be a loss. Its always advisable to renew your homeowners insurance policy on time in order to protect your home rather than canceling the policy.