What is a nonrenewal in insurance context?

A nonrenewal in the insurance context refers to the decision made by either the insured or the insurance company not to continue coverage for another policy period once the current policy expires. This can occur for several reasons, including changes in risk, lack of payment, or the insurer's determination that the insured no longer meets their underwriting criteria.

When a nonrenewal is enacted, it means that the policy will not be extended past the expiration date, resulting in the insured needing to seek alternative coverage. This situation often arises at the end of a policy term when the insurer evaluates the ongoing viability of covering the risk presented by the insured.

In contrast, other options refer to different circumstances within the insurance cycle. Changes in policy terms before renewal indicate adjustments that might be made to the policy's coverage, limits, or exclusions, which do not relate to the decision of nonrenewal. An increase in premium at the time of renewal involves the insurer revising the cost of the policy for the next term but still implies a continuation of coverage. Immediate cancellation during the term refers to a situation where the insurer or insured terminates the policy prior to its expiration date, which again is not the same as a nonrenewal.