Throughout the period, policyholders’ activities on the road and behind the wheel are always under their insurance companies’ radar. With big helps from police officers and local DMV, insurers know whether or not it is necessary to make some changes to the policy. Changes are not always bad; drivers who have demonstrated safe practices and followed insurer’s guidelines can lower their rates or become eligible for discounts to reduce the premium even further.
The countdown for renewal date starts as soon as the policy takes effect. In terms of renewal period, auto insurance policies are available in two choices:
· Annual Policy: an auto insurance policy that is valid for one year.
· Semi-annual Policy: some policies are valid for only 6-moths period. For policyholders, 6-months provide the chance to improve DMV records and reduce the premium for the next renewal date.
Auto insurance companies have the obligation to notice policyholder about renewal information. They can send it via mail or email within 45 – 30 days in advance of renewal date. Unless policyholders want to make changes to the current policy, renewal process should be quick and easy. Nonetheless, it is best for policyholders to do their due diligence and check for errors or unexpected surcharge. Before the renewal takes place, please make time to:
· Review the policy: the best time to verify discounts or make changes to coverage is on renewal date. It becomes more important when policyholders have practiced safety guidelines from the insurer as a requirement for discount eligibility. Auto insurers often reward good customers with lower premium as well. In many cases, it takes an insurance agent to see potential changes in the policy.
· Make payment: whether policyholders want to continue or cancel the policy, the best time to notify the insurer is on renewal date (or several weeks before). Some carriers do not allow for grace period on renewals, so they can cancel the policies because there is no payment confirmation. Even when policyholders want to switch to new carrier, it is important to notify the current insurer to avoid fines.
An increase in premium rate is not uncommon. It happens for two main reasons. First, the insurance company increases the base rate. In this case, all policyholders should get premium surcharge. Even good drivers with clean records should pay more under this circumstance. Another reason is that the policyholder has higher risk than before in the previous period. Traffic tickets and bad credit score can lead to premium surcharge. Auto insurance claims for an at-fault accident almost always increase the premium as well.
Changes before Renewal
Insurers allow policyholders to make changes in the policies between renewals; this regulation applies only for auto/car insurance policy. Other vehicles such as RV, boat, and motorcycles may not have this option. Changes in policy for examples coverage omission or vehicle removal from the list can offset the premium surcharge from bad DMV records. In worst scenario where policyholders have records of involvement in accidents that cause severe injuries or deaths, the rate can go very high beyond affordability. To compensate for expensive premium, policyholders can choose to purchase only state’s minimum coverage requirements.
There are times when auto insurance companies add small amount of money to the bill. It is normal for semi-annual policy with which insurer adds renewal fee. Late payment is also punishable by small fines (from 5 to 15 dollars). Late fee is one time fine, which means it will disappear as policyholder pays on time the next month. Anytime there is odd surcharge without information, it is good idea to ask helps from insurance agents. The additional fee is possibly a mistake to waive.
Auto insurance policy is not a one-time purchase effective for lifetime; all are subject to changes and renewals. The idea is to give the chance for good drivers to get lower premium and punish bad driver with premium surcharge. Cancellation is also common because the policyholders have DUI or felony convictions.