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Auto Insurance Renewal

· 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.

Premium Surcharge

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.