Florida Insurance Licensing Practice Exam

In the context of insurance, "non-renewal" specifically refers to the decision made by an insurer not to renew a policy when it reaches its expiration date. This means that once the current policy term concludes, coverage will not continue unless another arrangement is made, such as obtaining a new policy. This action may occur for various reasons, including changes in risk assessment, a history of claims, or the insurer's own business decision regarding the type of coverage provided.

Understanding non-renewal is crucial, as it can affect policyholders significantly. By not renewing, the insurer essentially terminates the existing agreement, leaving the insured responsible for seeking alternative coverage. This concept is distinct from other terms in insurance; for instance, raising policy premiums refers to an increase in the cost of an existing policy rather than a decision regarding its future status. Similarly, transferring a policy to another insurer involves a policyholder actively moving coverage, and canceling a policy before the term ends means that the policyholder or insurer decides to terminate the coverage well before the expiration date. These actions are fundamentally different from the concept of non-renewal. Thus, it’s essential to recognize non-renewal specifically as the insurer’s choice not to extend the coverage when the current term