Policy renewal is an important event that happens periodically, during which your insurance company sends you a proposal for the next term of your policy. This proposal may include changes in terms and conditions, making it a crucial time for you to review your policy and make sure that it still meets your needs. Despite the importance of this process, it can sometimes be tedious, which is why we have prepared a guide to help you navigate it.
When does my insurance renew?
Typically, policy renewal occurs shortly before the expiration of your current policy. The frequency of renewal depends on the type of policy you have and the length of your policy term, but it generally happens every 6 or 12 months. The busiest months for auto renewal are April and October each year. Around 4 weeks before your policy expires, your current insurance company will send you renewal documents, which include the company's proposal for the next term.
Why is my insurance rate changing?
During renewal, your policy is re-rated by your insurer, which can lead to either an increase or decrease in your premium. Sometimes, insurance companies send renewals that are not as attractive as they once were, and an increase in your premium can be caused by a variety of factors, some of which are outside of our control, while others we can prevent.
One of the main reasons for an increase in your premium is inflation. As the value of the dollar decreases, the cost of services increases. Another reason for an increase in premium might be your age. As you get older, your reflexes slow down, your vision deteriorates, and your mind becomes less clear, which can result in more money being taken out of your pocket to insure your vehicle. There are still things you can do to ensure that, as a senior citizen, you still get the best insurance deal available.
The area you live in is another significant factor in calculating your insurance premium. Insurance companies use detailed algorithms to calculate premiums, taking into account multiple variables such as the number of cars in your zip code, the number of claims or natural disasters in your neighborhood, etc. If these factors have changed since your last policy term, your premium may increase.
Interestingly, if you live in an area with a high likelihood of earthquakes, the longer it's been without an earthquake, the more your earthquake coverage will cost. This is because an earthquake is more likely to happen after a long period of peace when the tectonic tension builds up.
On the other hand, there are premium-increasing factors that you can potentially avoid. Every time you renew your policy, your insurance company reviews your policy, and if there have been new claims, incidents, or traffic violations, your premium will increase. The increase will depend on the severity of the incident. To avoid unwanted increases in your premium, it's best to stay safe and responsible on the road and maintain a clean driving record.
What should I do when renewal time comes?
When renewal time comes, it's best to take a step back and review your policy. Even if you think you have a great rate at the moment, it's worth shopping around to see what other offers are available. Many insurance companies offer loyalty programs that provide benefits for staying with them for a certain length of time, such as lower rates and accident forgiveness. These offers can be attractive, but it's essential to be aware that they might sometimes be used as distractions to make you stay with a company that doesn't offer you the best deal.
To ensure that you get the best deal out there, it's essential to have certainty that the offer you're presented with is the best one you can get. Shopping around for a policy can be time-consuming, but it's worth it in the long run.
Thankfully, with Luna Insurance, you don't have to shop around dozens of websites! We submit all of your information to the insurance carriers and return their quotes directly to you. All you have to do is choose your favorite one! Even better - when renewal time comes around, Luna automatically re-shops your insurance.