All too often following a loss, insureds are a faced with another shock when they open their mail and find a notification that the insurance company is not renewing their policy at the end of their existing policy term. Recently my colleague Edward Eshoo and I represented a policyholder facing this very situation. The insured was already fighting the insurance company for benefits under the policy and now in the midst of a loss was being told that at the end of the current policy period the insurance company would not be renewing the policy. While insurance companies have the right to non-renew or cancel coverage, there are strict requirements governing when how and when they may do so.

Under section 143.17a(a) of the Illinois Insurance Code, an insurance company must give 60 days’ notice prior to the end of the policy period of their intention not to renew the policy at the end of an existing term. Under the Code, failure to provide the requisite notice results in the policy being renewed under the same terms and conditions for an additional year, if the premium is paid.

In the instant situation, the insured was presented with a Notice of Nonrenwal 34 days before the expiration of the policy. The insurer’s notice was not in accordance with either Illinois Law or the policy’s “Illinois Changes – Cancellation and Non-Renewal” form. Therefore, we forwarded the insured’s premium payment along with a letter to the lawyer for the insurance company requesting the policy be renewed. We were both a little taken aback when the next communication we received from the insurance company’s lawyer was a copy of the policy and declarations showing a coverage period for the next year.

The moral of the story: Don’t take the insurance company’s decision not to renew lying down. Review the policy language on cancellation and non-renewal and make sure the policy is in accordance with state law. Hold the insurance company to its own notification requirements.