Car Insurance Renewal 101
As a new year approaches, people start thinking about their car insurance, wondering if they can save with another policy. Not every policy renews in January, but many policies do. Regardless of when your policy expires we want you to be informed.
Here are the most commonly asked questions about car insurance renewal:
When Does My Insurance Policy Renew?
Your car insurance has an expiration date. All you have to do is look at your car insurance ID card to see when that is. An insurance renewal comes towards the end of the specified length of time on your card. Your insurance rate will not change much during the period you’re insured or at renewal, except during the initial policy period, when your rate may be affected for being ticketed for reckless driving or after receiving numerous other tickets. Sometimes, your rate goes up right away because you simply don’t meet certain underwriting guidelines. After this initial policy, however, your rate should stay the same unless you add or subtract coverage or change your coverage limits.
There are no set times when insurance policies renew, however they do renew annually or semi-annually. You will usually hear from your agent or carrier 60 to 45 days before the renewal date. He or she will be hoping you renew. Renewal information from your carrier will be mailed or emailed to you 45 to 30 days before your renewal. You may also hear from other agents you’ve spoken to in the past, who are aware that your renewal is up. They will be looking to entice you into a new policy with a different carrier.
How Do I Know if I Have Auto Renew for Car Insurance?
Most people have auto-renew, so if you do nothing, your policy may be renewed automatically. It’s best, however, if you ask your agent if you do want to stay with your current carrier and policy. There’s nothing worse than having a lapse in insurance, which will significantly raise your rate so don’t make any assumptions. If you see that your car insurance is about to expire and you have not heard from your insurer it’s best to contact your agent.
What Should I Do During Insurance Renewal?
Go over your current policy details and see if any new discounts apply. Make sure your address, marital status and every bit of information are updated. After you’ve made changes, get a new quote from your insurer to see if you can pay less (or the same). Next, shop car insurance quotes and see if you can get a better deal. It’s fine if you tell the agent you want to renew and then change your mind, as long as you terminate one of the two policies, preferably in writing, so you don’t end up paying twice for car insurance.
Is There a Grace Period on Renewals?
Every insurance company is different. While some insurers offer a grace period for payments, some do not. However, most insurers do not allow a grace period on renewals. You should always make sure to cancel (if that’s what you want), in case your insurance company does apply a grace period for your account, which means you’ll have to pay for the policy twice otherwise.
Why Did My Car Insurance Rate Go Up?
If you didn’t have an accident and have no idea why your rate went up, here are the most common factors that cause a hike in rates: moving houses, a lower credit score, you’re driving more/longer for a commute, a ticket for a minor traffic violation or major traffic violation, you filed a claim (yes, even comprehensive), you turned 70 (or older), or you had a lapse in insurance.
If you got a speeding ticket, a rate increase will depend on some factors, including your driving history, the state you live in, how fast you were going and the insurance company you’re insured with. Every insurance company has a different rating system for violations.
If you have only one speeding ticket and it was your first, some insurance companies may forgive it as a one-time mistake. In fact, many insurance companies have first-ticket forgiveness programs in certain states. However, if this is not the case where you live, and you have more than one, you are likely to see a rise in your auto insurance rate.
In general, the percentage increase in your insurance rate for a speeding ticket will vary between 20 to 30% on average. If you were traveling up to 15 MPH over the speed limit, your insurance rate increase will be no more than 20%, but for 30 MPH or more, you can expect a 30% increase.
Sometimes, your rate will go up without any changes in your profile and without any tickets or violations. The fact is that distracted driving and a high number of claims filed will cause insurance rates to increase across the board. So, do not be surprised if you end up having to pay more at renewal. The best way to pay the lowest prices for car insurance is by comparison shopping auto insurance rates.
What’s a Non-renewal?
When you let your policy expire by not renewing, your insurance company may refuse to offer you a new policy. This is called a non-renewal. This is why it’s so important to renew your policy and not assume that it will automatically renew. Or, if you’re unsure about your current carrier, compare prices and do not let a single day lapse between policies. Lapses in insurance are costly and they turn away insurers who see it as a sign of risky behavior. At best, your rates will be higher because you let your policy lapse. At worst, you'll have a hard time getting insured.
Other reasons for non-renewal include: filing a large claim from a really bad at-fault accident; several claims; several moving violations (speeding tickets, running a red light/stop sign) and consistent late payments. At best, an insurer will raise your rates dramatically for the reasons listed here. However, refusal to insure a consumer happens more often than you’d think.
What Is the Difference Between Cancellation and Non-renewal?
There’s a huge difference because if you’re canceling, that means you’re not renewing. Chances are that you have another insurer in mind as well. A non-renewal is when you’re dropped by your insurer for risky behavior or for filing too many claims. It’s important not to cancel a policy until you have a new one. A lapse in insurance raises rates and may cause insurers to turn you away. If your insurer sends you a non-renewal notice, get an auto insurance quote right away so you don’t have a lapse in insurance. You may be harder (more expensive) to insure now, but there’s no getting around it. Getting caught without car insurance could mean really stiff fines and penalties that include jail time.
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