The difference between cancelling a car insurance policy and nonrenewal are very distinct and you should know the difference.
If a car insurance policy has been in effect for more than 60 days, then a company can only cancel your policy if you stop paying your premium, misrepresent yourself or perpetrate insurance fraud, or have you driver’s license suspended or revoked. Therefore, as long as you pay your premiums, remain honest, and avoid actions that could result in forfeiture of your driving privileges; your car insurance policy will not be cancelled.
With that in mind, you or your insurance company can choose to not renew the policy when its term expires. The amount of notice your insurance company gives you will depend upon your state’s laws and the insurer must provide an explanation as to why they are cancelling it. You can also consult the insurance company’s consumer affairs division for further clarification and your state insurance department if you’re still not satisfied.
Additionally, your insurance company may simply decide not to renew certain policies in a certain geographic location in which case, it wouldn’t be your fault. However, if you take risks and are caught in reckless or drunk driving, you premium could be legitimately increased or the policy could be dropped.
Finally, if your policy isn’t renewed, that does not mean that you will definitely be charged a higher premium by a different insurance company.