All About Insurance Renewals

Drivers exchange insurance information following a car crash.
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An insurance renewal is when you opt to continue an insurance policy. Your insurance renewal may include an increase in your rate. Of course, there are exceptions to every rule, and it's possible for your rate to change shortly after purchasing a new policy if you don't meet underwriting guidelines or if you do something illegal or dangerous.

Once you are through the initial policy period, your insurance rate may change when it's time for your policy renewal. That depends on the type of policy, though.

When Does an Insurance Policy Renew?

The renewal date of your insurance policy is based on the date your policy took effect and the length of your policy period. Policies usually renew annually or semi-annually.

Some auto policies are locked in for a full year. Homeowners insurance policies are typically one year, and policies for motorcycles, boats, and RVs are often renewed annually.

It's very common to have an auto policy renew every six months. Some motorcycle, boat, and RV policies also renew semi-annually.

Renewal information is usually mailed or emailed to you 30 to 45 days in advance of your renewal. You will receive a declaration page along with other information explaining your policy. A new proof of insurance card is usually enclosed with the declaration page.

What Should I Do When My Insurance Renews?

Your renewal is a good time to review your policy to verify discounts or make changes to coverage. It helps to have a reminder because insurance can be easy to forget about if you haven’t needed to use it recently. It's a good time to contact your insurance agent or your insurance company to review your policy. You may want to make changes to your coverage if your situation has changed. You may want to shop for another policy if you're not happy with your rates or service.

If you plan to continue your coverage, it's important to continue making your payments. Making your payment notifies the insurance company that you want to continue the policy. It's especially important to pay your renewal payment on time because some carriers don't allow any grace period on renewals. It's equally important to cancel your insurance policy if you don't want to continue your policy. This is because some companies do extend a grace period and they may charge you for the grace period if you don't notify them of cancellation.

Why Did My Insurance Renewal Price Go Up?

It's possible for every person insured with a given carrier to have a rate increase. If an insurance company is losing money, even good drivers with no accidents or tickets can have their rate increased. Just keep in mind that it's still a lower rate than someone with those violations.

It's also possible that increased driver risk can influence your rate. If you received a moving violation or were involved in an accident, your insurance rates will probably be increased at your renewal.

Insurance rates may increase or decrease based on industry trends. If more people are driving, there are more accidents and rates go up. If there are fewer people on the roads, rates may drop. According to the Insurance Information Institute, rates increased every year from 2010 to 2017.

Can I Make a Change Before My Renewal?

Auto coverage can often be changed between renewals, but it's different for motorcycles, RVs, and boats. Sometimes insurance carriers restrict changes on these policies to renewals only. Adding vehicles is always possible, but taking coverage on and off existing vehicles may not be. Check with your insurance carrier to see what's available in regards to changing coverage on your motorcycle, boat, or RV policy.

Rate Increases Before Your Renewal Date

If rates only change at renewal, you might be wondering why you are getting an additional $10 tacked onto your payment. Usually, if you see a mid-term rate increase, it's a fee. Slipping up and paying late one month on your insurance policy will often result in a late fee. One good thing about late fees is that they go away the next month as long as you pay on time.

Talk About Mistakes When They Happen

The biggest reason that your insurance rate goes up is that you have gotten into an accident or engaged in risky driving behavior in the past insurance period. It's best to be proactive about contacting your insurance agent or insurance company about the accident or ticket as soon as it happens. At worst, you’ll be prepared for the consequences and have an idea of the anticipated increase in advance. At best, your agent might be able to save you some money by negotiating before it’s too late. 

Article Sources

  1. Consumer Reports. "Car Insurance Rates Are Going Up." Accessed April 19, 2020.

  2. National Association of Insurance Commissioners. "NAIC Consumer Shopping Tool

    for Auto Insurance," Page 8. Accessed April 19, 2020.

  3. Insurance Information Institute. "Facts and Statistics: Auto Insurance." Accessed April 19, 2020.