Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Reviewed by Jeffrey Johnson
Insurance Lawyer

UPDATED: Jun 24, 2018

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Here's what you need to know...

  • Car insurance policies are sold in terms. When you buy a 6-month or 12-month policy, the auto insurance company will provide you with coverage for the entire policy period without changing your personalized rate
  • Auto insurance renewals are run about 45 days before the term expiration date.
  • You’re notified by mail how much your renewal term of insurance will be.

Not all auto insurance policies continue automatically when the term expires.

If you’re currently carrying insurance, it’s good to know not just when your policy expiration date is, but also if your policy has an auto-renewal feature.

While you can easily find the dates that you need to reference on your policy documents, determining if your policy will renew without taking action isn’t as straightforward.

Overlooking how important it is to know if your policy will renew without a phone call cover lead to a lapse in coverage.

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What is a car insurance renewal?

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An insurance term is the period of time that a car insurance policy is in effect with a specific insurance carrier.

During the term, the company won’t adjust your rate unless you make changes to the drivers, vehicles, or coverage on the policy. When the term is about to end, the company will run a renewal.

After the initial policy term, which can last 6 or 12 months, the renewal documents are sent.

To process a renewal, insurance companies must put the policy back through the underwriting phase to reassess risk.

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How do you know when your auto policy is renewing?

If you haven’t memorized the effective date and expiration date of your policy, you might be at a loss when it comes to remembering when your policy renews.

If you completely forget that your insurance policy renews, you’ll be reminded in the mail. All insurance companies are required by law to send out notifications when a policy is renewing.

The law ensures that consumers know if their rates are going to change and how much they’ll pay for coverage. By giving the consumer time, they can shop the marketplace to look for better rates.

When will you get your renewal notice?

In most cases, you’ll receive a physical document in the mail at least 30 to 45 days before the policy is going to expire.

If the company is willing to continue your coverage, you’ll find a new declarations page, billing schedule, and policy premium in your package.

It’s common for your renewal rate to change from term to term.

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What happens if the company doesn’t want to continue your coverage?

To process a renewal, the company needs to look at your driving record and claims record to see if you’re at risk of filing a claim the next term.

If you’re too much of a risk or ineligible for insurance, the company will set you up for non-renewal. This means the coverage will terminate at the expiration date.

If your policy is non-renewed, you’ll get a notice in the mail about 30 days before the expiration.

The notice will say that the policy won’t continue and will explain why you’re no longer eligible for coverage.

In a few cases, you might be able to answer questions or provide documentation that will allow you to keep your policy.

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What do you need to do when you get your renewal notice?

It’s very important to review your renewal closely.

You should compare your old rates to your new rates and then look for the cause of a rate increase or decrease.

Here are some things to look for:

  • A loss of discounts like Good Driver, Good Student, or Driver Training
  • A change in credit rating
  • A change in your mileage classification
  • A change in your vehicle usage class
  • Vehicle rating changes
  • A change to your mailing address that didn’t change your garaging address

It’s important to look for changes in your rating factors as well so that you can correct any errors that might exist.

Is your policy set up for automatic payments?

The only way to feel confident that your policy will automatically renew is when you have your auto insurance set up for automatic electronic payments.

When your policy renews, the automatic payments will continue unless you tell the insurer to stop the drafts.

Be sure to verify that renewals are automatic with Electronic Funds Transfers just so that you know that you don’t have to worry about a lapse in protection.

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