Cancellation of insurance and non-renewal of insurance have a similar result: in both cases, you no longer have insurance with that particular company. Apart from that, they are quite different.
If you compare having insurance to having a job, “non-renewal” would be getting laid off and “cancellation” would be getting fired. In both cases, you no longer have a job. But the reasons why you lost your job and the way future employers view the loss of your job are entirely different in the two scenarios. The same can be said of cancellation and non-renewal.
If you receive notice that your insurance has been non-renewed it means your insurance will not be renewed past the current expiration date. There are many reasons why the insurance company might non-renew you one common reason is that the insurance carrier is pulling out of your area. It could also be that the company has decided not to cover anyone who has had more than three losses in a five-year period; but it is a company-wide decision and, even though you fall into that category, it is not specifically aimed at you. You will typically get 30 60 (if not more) days notice so you have plenty of time to get new insurance lined up to take effect after the existing policy expires.
On the other hand, if your policy is cancelled is it directly due to something you have (or have not) done. The most common reason for the cancellation of a policy is for non-payment of premium. That’s also the easiest reason to reverse pay your premium before the cancellation date, and the policy will be reinstated.
The other reasons for non-cancellation are more serious. Misrepresentation of a material fact can lead to cancellation. This includes things like claiming to be the owner of a vehicle or piece of property you don’t legally own; giving inaccurate information regarding your birth date, driver’s license number, etc; or giving any information that effects the your right to obtain insurance or the rate you are assessed.
Another reason for cancellation is filing a false claim, like banging on your car with a ball-peen hammer and claiming it was hail damage, reporting an item as lost or stolen that was still in your possession (and/or you know where it is), or in an arson fire (if you participated in the arson).
The situations leading to cancellation of an insurance policy would be ones where you intentionally gave false information, omitted pertinent information, made false allegations, etc. If you make an honest mistake (you thought you lost a ring, but subsequently find it) or if you genuinely forget something that you should have disclosed, if you are honest about it you most likely can work it out without having your policy cancelled.
The ramifications of a cancelled insurance policy can be felt when you try to replace the cancelled coverage. You will find that most other insurance companies are not likely to insure you, and any insurance you can get may be much more expensive than it would be otherwise.
Bottom line: you have no control over your insurance being non-renewed, but you have no one to blame but yourself if your insurance is cancelled. Be honest on your application, file legitimate claims, and pay your premiums on time and you will never have to deal with the consequences of a cancelled insurance policy.