All about car insurance renewal

From auto-renewal to non-renewal to getting a new policy.

Logan Sachon

Logan Sachon

Published July 19, 2018

You can change car insurance companies whenever you want, but many people don’t think about how to save money on car insurance until it’s time to renew their policies. Car insurance renewal time is the perfect opportunity to review your policy — and save money.

Read on to find out:

How to renew your car insurance

Many car insurance policies have auto-renewal written into their terms, which is great if you don’t like to think about paperwork, but not so great if you’re interested in making sure you’re not over-paying for your car insurance policy. If your car insurance company offers auto-renewal, renewing is easy because it happens automatically.

A month before your policy expires, you’ll get a letter from your insurance company about renewal, along with info about your new car insurance premium, a new declarations page and new insurance cards. If you do nothing (and keep making payments), your policy will automatically be renewed and new premium rates will apply on your renewal dates. The new rates are based on your driving history, your age, and other factors, including claim rates for your state — sometimes it’s possible for your rates to increase even if you’ve never made a claim or had any strikes against you.

Auto-renewal of car insurance policies

If you feel okay about the new rates, you don’t have to do anything except continue to make payments and swap out your new insurance cards to keep in your wallet and glove box of your vehicle. If your rates have changed, you can try to negotiate with your current insurance company.

How to decline auto-renewal of your insurance policy

If you get an auto-renewal notice but you don’t want to renew your policy, you have two things to do: let your current insurance company know you don’t want to renew your policy and buy a new policy that takes effect before your current policy ends (see below).

Declining to renew your auto-renew policy is essentially canceling your auto insurance policy, effective the last day of your current policy. How to do it depends on your insurance company. Some will let you cancel over the phone, others will want a letter stating your intent to cancel your policy.

However you do it, make note of your end-of-coverage date. If your insurance company declines to renew your auto insurance policy or you decide you want to switch companies, you need to get a new policy — and you need to get it before your policy expires.

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How to shop for a new auto insurance policy

Whether you are denied renewal of your current auto insurance policy or you’re interested in shopping around for a better premium, shopping for a new auto insurance policy is the same process as when you first learned how to buy car insurance. And thankfully, it’s just as easy, too.

1. Decide if you have the right amount of coverage.

Many people either have too much auto insurance or too little, and shopping for the right amount of auto insurance for your needs is the first step to getting the best deal. (When you get an auto insurance quote from Policygenius, we help you buy the right amount of insurance for you.)

2. Choose your deductible.

The deductible is how much money you pay out of pocket in the event of a claim before your insurance kicks in. The higher your deductible, the lower your premium — but a high deductible may not make sense for you if you don’t have access to the cash in case you need it.

3. Request car insurance quotes.

The Insurance Information Institute suggests requesting at least three price quotes before buying insurance. You can get multiple quotes through an insurance broker like Policygenius, or you can get quotes directly from the insurance companies. (And when you’re shopping for quotes, don’t forget about opportunities for car insurance discounts, like installing an anti-theft device, bundling policies, or more.)

4. Evaluate your quotes.

The cheapest quote may not be the best the quote, because not all car insurance companies are created equally. Check out our evaluation of the best car insurance companies to make the right choice for you. (Policygenius only works with top-rated insurance companies.)

5. Choose a policy, name your effective coverage date, and pay your first premium.

If your current car insurance policy expires on Friday, it may be tempting to name Saturday as the first day of your new policy. But that could leave you uninsured. Here’s why: most insurance companies end their policies at 12:01 a.m. — meaning that you’re not insured at all the day that your policy expires. If you want to be insured on Friday, you need to make sure your new policy is set to start at 12:01 a.m. on Friday — just as your old coverage lapses.

How car insurance non-renewal works

If you’ve had a large claim (like from a big accident), several small claims (like a small accident or two), if you’ve racked up several moving vehicle violations, or if you’ve been consistently late with your car insurance premium payments, your car insurance company may take a few steps, including:

  • Raising your premiums
  • Canceling your insurance
  • Issuing a notice of non-renewal

Increased premiums is pretty straightforward — if you’re going to potentially cost the car insurance company more, they’re going to charge you more — but what’s the difference between cancellation and non-renewal?

Cancellation voids your policy and can make it difficult to get insurance from any carrier in the future. Common reasons for cancellation are fraud or failing go pay your premiums, and it can happen at any point over the course of the policy.

Non-renewal happens when it’s time to renew your policy. A particular carrier might decide you’re not worth covering and decline to renew your policy. In can also be because of a broader business decision from the insurance company (for instance, they are downsizing and not signing as many policies). While the result is basically the same as a cancellation — you don’t have coverage — there’s nothing stopping you from going to a different company and getting a policy, so it’s less severe than a cancellation.

Companies must issue a notice of non-renewal before refusing to renew your policy. The notice will give their reasons for declining renewal, which you may be able to contest with your state’s insurance department.

Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.