Our auto insurance policy has been canceled due to a minor accident my husband had while parking. What are our options? Will we have to pay a fortune now for car insurance?

Donna, Virginia

Dear Donna,

If your policy is canceled, it may be hard for you to find auto insurance, and you will likely have to pay much more for it than you're paying now. If your policy is being nonrenewed, you will likely be able to find insurance, although you will probably have to pay more because of your driving record and claims history.

It's important to know the difference between cancellation and non-renewal. Both terms mean that your insurance company is no longer going to insure you, but the severity of each varies greatly.

Cancellation is much more severe than nonrenewal. It means that the insurer is terminating your policy. Common reasons for cancellation are: when you or a member of your household loses driving privileges during the policy period because of license suspension, revocation, or expiration; if you fail to pay your premium on time; or if you misrepresent material facts about your risk on the application, such as driving or claims history, or the number of people who have access to your vehicle.

Nonrenewal means your insurer is not electing to renew your policy. It is much less severe than cancellation. Common reasons for nonrenewal are: you've made one too many claims for at-fault accidents, you were convicted of driving under the influence of alcohol, or received one too many traffic citations over the last three to five years.

For more information, read The difference between cancellation and nonrenewal of auto insurance and Auto insurers seeing profit in risky drivers.

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Disclaimer: We are journalists, not financial planners or insurance brokers. Nothing we say should be interpreted as a recommendation to buy or sell any insurance product, or to provide other financial or legal advice.