Policy Structure & ProvisionsQuestion 474 of 474
The conceptual difference between cancellation and non-renewal is that a non-renewal:
a.Requires the insured's written agreement
b.Refunds the premium on a short-rate basis
c.Ends the policy at its expiration date
d.Ends the policy in the middle of a term
Explanation
Cancellation ends a policy before the end of the term it was written for and produces a return of the unearned premium, while non-renewal simply lets the policy run to its expiration date and does not continue it into a new term. Neither requires the insured to agree, and each carries its own notice requirements set by the law where the policy is issued rather than by the form itself.
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