What effect does nonrenewal have on a policy?

• A. The policy ends at expiration with notice
• B. The policy automatically renews if not canceled
• C. The insurer refunds all unearned premium
• D. The insured must purchase a new policy immediately with no grace period

Answer: (A)

Nonrenewal means the insurer will not continue the policy beyond its current term. The coverage ends at the expiration date, and the insurer must give advance notice of nonrenewal. There is no automatic renewal, so after expiration there’s no coverage unless the insured obtains a new policy. A refund of unearned premium is a concept tied to cancellation during the term, not to nonrenewal, and nonrenewal does not require an immediate, no-grace-period purchase of a new policy. The insured should secure replacement coverage before or near expiration to avoid a lapse.