Mathew B. Sims is Editor-in-Chief and has authored, edited, and contributed to several books. He has been working in the insurance industry ensuring content is accurate for consumers who are searching for the best policies and rates. He has also been featured on sites like UpJourney.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. He reviews content, ensuring that exis...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Jul 8, 2020

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Things to Remember...

  • A car insurance renewal notice is a document with new rates that take effect when your term expires
  • By law, insurance companies are required to notify you in advance before your rates change or your new term takes effect
  • While some states have different rules, it’s typical for companies to send out auto insurance renewal notices between 30 and 45 days prior to the expiration date
  • Most states have an auto insurance renewal grace period which will allow you to renew expired auto insurance online in many cases
  • Insurance rates will be different at renewal because the policy is underwritten against to assess new risk ratings
  • Some companies offer their customers the option to automatically renew if they’re set up for automatic payments

If you are wondering what is insurance renewal, and how the auto insurance renewal process works you are in the right place. Standard car insurance policies only last for either 6 months or 12 months at a time. During this time, the premiums that you pay after the policy is issued are the premiums you’ll pay until the term expires as long as you don’t make any changes to drivers, vehicles, locations, and coverage limits. Sometimes expired auto insurance can be renewed online during the grace period. If you are unsure of your auto insurance expiration date then check for the expiration date on your insurance card.

It’s not until the policy is set for renewal that the premiums can change for the better or possibly for the worse. Before renewing car insurance with Progressive, AllState, Geico, or whomever your current provider is, be sure to start comparing car insurance rates now by using our FREE quote tool above!

It’s important to budget for your insurance costs every year so that you can maintain continuous coverage without any lapses or surprises when you receive your auto insurance renewal reminder letter.

Since there’s a possibility that your insurance expenses could involuntarily go up at your renewal, you might be interested in learning when you should expect to get a notice in the mail.

Read this guide to car insurance renewals, and learn more about when they’re processed and what happens as your renewal approaches.

What exactly is an auto insurance renewal?

Car insurance policies renew after every term. Once the 6-month or 12-month term you carry expires, the policy must actually renew for your coverage to remain in effect. Does your car insurance renew automatically? Yes, in most cases, your auto insurance policy renews automatically. Does Geico renew automatically? Yes. Does AllState renew automatically? Yes. Does Progressive renew automatically? Yes. Well, you get the idea. In most cases, your auto insurance policy renews automatically, and if you buy new coverage you will need to remember to cancel your old auto insurance policy before it renews and you end up paying for two auto insurance policies!

While your first term isn’t a renewal, every term that you stay with an insurer after the initial term will be considered a renewal because it’s when a policy is reassessed for risk.

Typically, the state department of insurance has rules regarding how much advance notice you must be given before the rate changes.

If the company decides that the household is still an acceptable risk, new documents will be sent out and the policyholder will have the option to continue the coverage or to shop around for better rates elsewhere.

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Why do insurance rates change when an auto insurance renewal is processed?

There are several different reasons why your rates can go up or down when the policy renews. When you buy coverage, your premiums must stay level for the entire term after the policy has been underwritten, but that doesn’t mean they’ll stay level for life.

At some point, the insurer is free to reassess risk and to adjust the premiums when necessary. This happens when the term expires and the policy renews.

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Most Common Reasons for Rates to Go Up at Renewal

All too often, consumers receive their auto insurance bills to find that their rates have gone up even when there’s been no real change to the policy itself. For loyal consumers who’ve stayed with an insurer for years, a 25 percent increase can feel like a slap in the face.

Many experts say that being a loyal customer in the insurance market can cost you. Here are some reasons a company might increase your renewal rate:

  • The company has filed a higher gross rate through the department and it has taken effect
  • Your Motor Vehicle Report has new driving convictions reported
  • You’ve filed a claim that’s considered a chargeable loss
  • You haven’t responded to a request for your odometer reading and current annual mileage
  • Insurer has discovered a new household member and has rated them as a covered driver
  • You’ve lost Good Driver Discount because of chargeable loss or multiple violations
  • You’ve failed to provide proof to renew discounts for Mature Driver Training or Good Student Discounts
  • You haven’t signed a waiver for medical payments or uninsured motorist and it’s been added to the policy

Most Common Reasons for Rate Decreases at Renewal

While it’s not common, the rate decreases at the time of renewal are possible. More often than not, the rate change is because of something that’s changed in your favor and not because the company has lowered its base rates.

Here are some changes that can lead to rate decreases:

  • You’re a young driver and your driving experience qualifies you for Good Driver Discounts
  • You have a conviction on your record that’s fallen off after 36 months
  • You have an at-fault accident that’s fallen off of your insurance record
  • Your new clean record qualifies you for Good Driver Discounts
  • You’re eligible for a new loyalty discount
  • Your child earns good grades and received the Good Student Discount
  • You provide an odometer reading and you’re in a low mileage class

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How much notice will you receive?

You want to be sure that you have enough time to review your renewal notice so that you can shop the market to look for lower rates. It’s also important that you review the details and rating factors for errors that could save you money.

In most cases, the states require that companies send out your renewal documents at least 30 to 45 days before your term expires. You’ll need to be given at least 45 to 60 days notice if the policy is set for non-renewal.

What do underwriters look at when they process renewals?

Processing a renewal is a lot like underwriting a new policy application. Since everything is reassessed, the professionals will run all of the same reports they run when they’re issuing a policy.

Here are some of the things they might do:

  • Run drivers Motor Vehicle Reports
  • Run the Claims Underwriting Exchange report
  • Discount eligibility will be evaluated
  • Usage, mileage and vehicle ratings will be reassessed

If you’re about to receive your renewal, it’s important that you are prepared to shop the market. Taking the information on your renewal and getting multiple rate quotes is an efficient way to keep your auto insurance premiums low.

If you want to save time on your mission to find affordable coverage, use an online comparison shopping tool and you can see what each competitor in the market charges instantly.

Start comparing auto insurance rates now by entering your zip code into our FREE quote tool below!

Can I renew my auto insurance before it expires?

Insurance companies are legally required to send renewal notices before policies expire. Normally, this will be between 3 and 8 weeks before the policy expires. Learning how to renew expired auto insurance online is key if you are under the grace period.

  • Insurance companies are legally required to send renewal notices out before a policy expires
  • Whenever you receive a renewal notice,  you should take the time to carefully review your policy and report any changes needed
  • Many auto insurance companies provide automatic policy renewals which are convenient but could also be harmful to your needs
  • If you have had significant changes in your life, an automatic renewal would take away the possible savings you could have from those changes

When it comes to renewing car insurance policies, insurance companies are legally required to send renewal notices and they will usually send timely notices three to eight weeks prior to expiration.

Insurance companies are well aware that because of busy schedules, expiration dates can come and go without acknowledgment.

Thus, to avoid gaps or actual loss of auto insurance coverage, renewal notices that also serve as reminders are sent out well in advance of expiration dates, although the format regarding the amount of time and type of notification given is different with each company.

Enter your ZIP code into our FREE auto insurance comparison tool to find the best rates!

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Renewing Car Insurance Prior to Expiration

Renewal notices are also sent out in advance to give drivers the time to review their current policies and request adjustments according to any changes in their driving profiles.

The majority of car insurance renewal notifications are actually lengthy documents that require time and patience to review completely.

While examining, drivers can take note of any and all changes in the terms and conditions that the auto insurance companies may have made.

No matter what the case, notifications are sent early enough to grant policyholders the chance to consider all the facts before renewing or rejecting their policies.

Continuous or Automatic Renewals

In the interest of eliminating as much uninsured driving as possible, an increasing number of insurance companies offer continuous coverage that renews automatically unless the policy is canceled.

Usually, insurance companies will automatically renew the policies of those customers who pay using debit accounts or certain credit cards.

However, unless the insurance company specifically states that the policy will be automatically renewed, customers shouldn’t assume that because they’ve received a renewal notice, their insurance coverage will continue.

They should contact the company not only to ensure they have continuing coverage but also to report all incorrect policy information and any necessary changes needed for adequate coverage.

Continuous Renewals Benefit the Companies

Customers should understand that accepting the automatic renewal process could result in numerous drivers having higher costs rather than the lowest cost auto insurance company. Be sure that if you get an auto insurance renewal increase you shop around and compare rates from multiple companies. Auto insurance renewal fees and premiums are an important impetus to shop around, especially since the auto insurance renewal process can happen online, just like comparing quotes online!

While automatic renewal offer convenience because it eliminates the possibility of lapsing policies and dealing with the hassle of reviewing and signing contracts, automatic renewals remove the customer’s incentive to shop around and possibly find a better deal somewhere else.

Automatic renewals are actually favorable for insurance companies as well because if the customer doesn’t shop around and the policy is simply renewed, then the insurance companies retain their business, and all the profits from rate increases too!

Therefore, it is always to the customer’s advantage to thoroughly review their renewal policies because all insurance companies’ rates and coverage change.

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The Best Time to Renew Auto Insurance

The ideal suggestion regarding the renewal process is for customers to keep the current expiration date in mind and begin on their own approximately two months prior to expiration by doing research on other insurance companies.

In so doing, they give themselves ample time to investigate thoroughly which will place them in a better position to negotiate a more favorable deal either with other companies or their current insurance company.

An insurance policy will be effectively renewed after the renewal information has been sent and the customer has accepted renewal of the coverage with that company.

This process is designed to have policies renewed by or within range of the renewal dates so trying to have it renewed prior to this is not likely to happen, nor is it even necessary.

Depending on the method of payment, renewed policies can issue as early as ten days prior to the renewal date.

Insurance companies prefer the courtesy of being notified of renewal intentions as soon as possible after receipt of the renewal notification.

Find the Best Rates for You

In actuality, it is not important to renew an auto insurance policy prior to expiration. Most policies remain in effect for only one year and most customers don’t have the time to consider renewing before then.

The important thing to remember is that it’s beneficial to the customer to remain mindful of the expiration date so timely research can be done.

Insurance companies are always striving to attract new business and as a result, they offer a multitude of discounts and promotions to prospective customers.

There are a lot of details involved with the auto insurance process whether it is a new policy or a renewal, and it varies in each company as to how much of that detail is disclosed to their customers.

Thus if a customer has a desire to renew well before the expiration date, they should check with their insurance provider to find out if this can be done.

Enter your ZIP code now into our FREE quote comparison tool!

References:

  1. https://www.thebalance.com/what-is-an-insurance-renewal-527419
  2. http://www.iii.org/article/how-can-i-save-money-auto-insurance
  3. http://www.iii.org/article/if-i-file-claim-will-my-premium-go
  4. http://www.consumerwatchdog.org/feature/20-good-driver-discount
  5. http://www.insurance.ca.gov/01-consumers/105-type/95-guides/01-auto/auto101.cfm
  6. http://www.huffingtonpost.com/laura-adams/have-low-mileage-you-may-_b_7338458.html
  7. http://www.dfs.ny.gov/consumer/faqs/faqs_auto.htm