Renewing Your Car Insurance [Rates Factors & Tips]

If your car insurance renewal is coming up, remember that (1) your rates may change, (2) your policy may be canceled, and (3) it's a great time to compare quotes online.

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A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Sep 15, 2020

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Before you think of car insurance renewal as uneventful or mundane, remember this:

  • Your rates could go up.
  • Your provider could decide to stop insuring you.
  • You may be able to cut costs.
  • You may decide to switch providers.

Given that your renewal period holds the key to higher or lower rates, it’s imperative that you understand the basics.

That includes knowing when your renewal takes place, what factors determine your rates, the dangers of lapsed coverage, and how to cancel your policy in order to switch companies properly.

Our complete guide to renewing your car insurance begins now. You can also begin shopping rates by entering your zip code into our free car insurance comparison tool.

Renewing Your Car Insurance: The Basics

Here’s the deal: car insurance policies don’t last forever. They’re always sold and purchased in terms.

Your term is a specific time frame in which you have agreed to pay your provider a certain dollar amount in exchange for specific coverages on your vehicle.

Eventually, those terms will expire. As the clock starts to run out, your insurer will begin notifying you about renewal. It’s at this point you’ll need to make an important decision:
Should I remain with my provider, or should I look elsewhere?

When does your car insurance policy renew?

Car Insurance Renewal Timeline

First thing’s first – most car insurance policy terms are either six months or 12 months in length.

The start date of your term will coincide with the date that your policy took effect. Therefore, it could fall on any day of the month. As long as your term is in effect, and as long as you don’t make any changes, your rates should remain consistent throughout the term.

Around 30-45 days before your insurance term is set to expire, your provider will reach out to you by mail or email with a renewal package. This package will contain:

  • A premium invoice, or how much your policy will cost if you renew. In addition to providing the total cost, your insurer may also provide a monthly billing schedule
  • Policy ID cards that reflect the dates of your upcoming term.
  • A declarations page. Sometimes referred to as a “dec page,” this is an official document that lists out what you’re being insured for and other pertinent information.

Below is a sample declarations page:

Once you’ve received your renewal documents, be sure to take the time and look everything over. Review your invoice, policy cards, and declarations page to ensure all of the information is accurate.

If your policy is set to auto-renewal, and you’re happy with your pricing and documentation, you won’t need to do anything. Your policy will automatically renew once it expires, and you can continue making payments as is.

If your coverage is set to renew manually, you’ll need to make contact with your provider to confirm whether you’ll renew or cancel. This may be written, over the phone, or online, depending on your provider’s protocols.

What happens at renewal?

Insurers look to renewal as a time to reevaluate your risk as a driver, to the point where they may decide to adjust your rates – for better or worse.

Some of what insurers will review at this time will include:

  • Your recent driving history, also known as your Motor Vehicle Report (MVR)
  • Your credit-based insurance score
  • Your recent claims history through your CLUE Auto Report. CLUE stands for Comprehensive Loss Underwriting Exchange
  • Your odometer readings, to see where you are in your mileage
  • Your discount eligibility
  • Where you live, and if that’s changed

If you have questions about your MVR or your CLUE Auto Report, know this – both documents are accessible to you as a driver.

To get a copy of your MVR, begin by contacting your state’s Department of Motor Vehicles. Most will charge a minimal fee for you to obtain a copy.

The Fair and Accurate Credit Transactions Act (FACT Act) allows you to request a free copy of your CLUE Auto Report once every 12 months. You can begin the process by visiting this LexisNexis site, and following the prompts.

What do I do when it’s time to renew?

Drivers should never look to renewal as a time of inaction. In fact, renewal serves as the perfect time for drivers to reevaluate their policies and potentially save some cash.

  • Consider changing or dropping certain coverages. This could include raising your deductibles (for example, from $500 to $1,000), or getting rid of comprehensive or collision coverage for older vehicles.
  • Shop rates to see if you could be saving elsewhere
  • Switch car insurance providers (a subject we’ll discuss in further detail below)
  • Talk to your provider about discounts, and see what you may be eligible for
  • See if you can save money by bundling policies

Finally, it never hurts to pick up the phone and talk to your agent or representative. In the course of the conversation, you may learn about money-saving programs worth participating in, such as usage-based car insurance.

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Car Insurance Renewals and Rates

It’s a delivery you’ve been expecting for weeks.

Your provider has finally sent you your renewal documents. But as you sit down to review the contents, you feel your heart begin to sink.
A rate increase. How could this have happened? 
The truth of the matter is that there are many reasons why your rates could go up when it’s time for renewal. Some of those reasons will make sense. Others? Not so much.

Bottom line? Renewal doesn’t have to be a time of the unexpected. Keep reading as we dig deeper into why your next car insurance bill may reflect higher rates.

Why did my car insurance rates go up at renewal?

Good driver, or not-so-good driver, no matter who you are, you can still experience a rate hike at renewal.

While some of those reasons may not have much to do with your driving, some of them will. Some of the most obvious reasons? Recent violations, infractions, or claims.

Changes in Your Driving History

If you recently received a traffic violation (like speeding or running a red-light) or were found at fault in a car accident with damages, it is likely your rates will go up. This will be a result of something called a surcharge.

A surcharge is a penalty that a provider adds to your premium as a result of certain violations or incidents.

So, let’s say you got a ticket for speeding. If your insurer deems that ticket is worthy of a rate increase, they’ll consult with a surcharge schedule to determine just how much to tack on to your premium.

Surcharge schedules will differ from company to company, and from state to state. However, in analyzing data purchased from Quadrant, we’re able to shed light on what kind of rate increases you can expect for specific violations:

Insurance ProviderClean RecordOne Speeding TicketOne AccidentOne DUI
American Family$2,693.61$3,025.74$3,722.75$4,330.24
Liberty Mutual$4,774.30$5,701.26$6,204.78$7,613.48
State Farm$2,821.18$3,186.01$3,396.01$3,636.80
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It’s clear – no matter which provider drivers are insured with, they’re experiencing rate increases when moving from a clean driving record to one with a speeding ticket, accident, or a DUI. In fact,

On average, drivers are experiencing a 17.5 percent increase for speeding tickets, a 31.3 percent increase for car accidents, and a 57.5 percent increase for DUIs.

We can further see that:

  • Liberty Mutual has the highest average rates across the board for one speeding ticket ($5,701.26), one accident ($6,204.78), and one DUI ($7,613.48).
  • USAA has the lowest average rates across the board for one speeding ticket ($2,193.25), one accident ($2,516.24), and one DUI ($3,506.03).

Recent Claims Activity

By definition, a claim is any time you formally request funds of your insurer to cover damages made to your vehicle. While not all claims will result in a rate hike, some will – particularly when it comes to car accidents in which you’ve been found at fault.

In fact, the Insurance Information Institute reports that drivers making claims going beyond a certain threshold in an accident they caused can usually expect a rate increase.

According to Investopedia, that rake hike could be in the 20 to 40 percent range and can remain on your policy for years, depending on the nature of the claim. It’s also worth noting that as you file more claims, the likelihood of you facing a rate hike also increases.

Some drivers will experience higher increases than others. In determining what kind of increase you might see, insurance providers will also consider the following as mitigating factors:

Claims Factors that Affect PremiumsImpact
Your ageYounger drivers with less experience tend to pay higher rates
Your stateAverages vary greatly between states
Whether there were injuriesInjuries present will make your rates increase even more
History of accidents and ticketsA blemished driving history can point to greater risk, signaling a rate hike
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To elaborate,

  • Being a younger and less experienced driver can have a negative effect on your rates, as you’re already considered a risk to insurers
  • Because rules and regulations vary by state, your place of residence can have a noticeable impact on the potential increases
  • The severity of the accident – especially if there were injuries – can lead to even higher increases, as this means your insurer will pay out more in damages
  • If you already have a history of accidents or other violations, providers may decide to categorize you as a “high-risk” driver. This is important because high-risk drivers pay some of the highest rates of all motorists.

Other Reasons for a Rate Hike

Beyond traffic violations and increased claims activity, drivers may see rate increases for the following:

  • Your credit has worsened, and you live in a state that permits the use of credit-based insurance scoring.
  • You’ve experienced life changes such as moving to a new city with higher crime rates, adding a teenage driver to your policy, or purchasing a more expensive car to insure.
  • State laws or regulations have affected the way rates are assessed
  • Your provider is paying out more in claims and is passing the increase to its customers.
  • You’ve become ineligible for certain discounts or programs

Keep in mind that these are just some examples, as there are many reasons why your insurer may justify a rate hike. But remember this – if your provider is quoting a higher rate and you’re not sure why don’t be afraid to ask questions and seek answers.

Lapses and Car Insurance Expiration

Here’s the deal – it is never a good idea to let your car insurance lapse, and it’s never a good idea to drive without insurance. We get it. With tight finances and escalating bills, your monthly premium becomes a tempting expense to sacrifice. You may even think, “I’ll hold off on renewing. I just need a couple of weeks.”

However, if you’re pulled over by an officer, or involved in a car accident without insurance – you’ll end up paying a much higher price.

Some of those consequences can include license suspension, tickets, fines, or shouldering the costs tied to an accident you caused.

What is considered a lapse in coverage?

If your insurance has lapsed, it means that it’s expired and has been canceled by your provider. In other words, you don’t have coverage on your car.

  • Lapses will typically occur because you’ve missed your required payment, or you didn’t renew. However, other scenarios could account for lapses such as no longer driving, or being deployed overseas.
  • A lapse can be one day, one week, or many months.
  • Keep in mind, car insurance companies can’t cancel your coverage without prior notice. Experts say most states must provide drivers at least 30 days’ notice.

Is there a grace period for missed payments?

A grace period is the amount of time a provider will allow you to make a car insurance payment after the due date and still remain covered. Whether you have a grace period and how long it is, will vary by company and by state.

In some cases, if you’ve missed your payment by one day, your insurers will still allow you to pay without being penalized. Some will extend that period to a few days, or even more.

However, if your coverage has lapsed for weeks or even months, grace periods won’t be an option. Additionally, even if your insurer does offer a grace period, it is possible that you can still be assessed a late fee on top of your regular premium.

What if my car insurance expires?

At what point does your car insurance expire? The answer is simple.

Your car insurance expires the first minute of the day after your term ends – at exactly 12:01 a.m.

If your car insurance is expired, the last thing you should be doing is driving. Immediately take action with your insurer, and look for alternative sources of transportation until you know you are covered.

What are the penalties for lapsed or canceled car insurance?

Perhaps the most obvious risk anyone with lapsed coverage can face is causing a car accident without insurance.

This will immediately put you on the hook for all of the damages and legal requirements tied to the wreck.

As if that isn’t scary enough, drivers with lapsed coverage can face other repercussions:

  • As soon as your policy is canceled, your insurer will be required to notify the state. Once the state is notified of your cancellation, you may be exposed to a number of immediate consequences, such as license or registration suspension, vehicle impoundment or repossession, or even jail time.
  • Going without insurance for too long can result in you being deemed as a high-risk driver. As a high-risk driver, you can expect to pay higher car insurance rates.
  • If you end up with a license suspension and need to get it reinstated, your state may require you to get an SR-22 form filed with your policy.

Can I get my canceled coverage reinstated?

Whether you can get your canceled policy reinstated will depend entirely on your provider.

In some cases, you’ll be able to get your policy reinstated, along with a fee. Your provider may maintain the same policy number, where others may opt to start an entirely new policy. Other providers won’t allow you to reinstate at all, forcing you to look for a new car insurance company.

Bottom line? As long as you’re facing lapsed coverage, you need to contact your provider as soon as possible to try to remedy the situation.

When Your Car Insurance Company Won’t Insure You

When you consider the fact that car insurance is a legal requirement in just about every state, it may seem odd that some providers would choose not to insure certain drivers.

But the truth of the matter is this – many car insurance companies will make an intentional decision to stop providing coverage to certain customers, whether they like it or not.

Keep in mind that when a provider decides not to renew a policy, it may not be at the fault of the driver. Right now, we’re breaking down some of the most common reasons for non-renewal – the good and bad.

What is a non-renewal in car insurance?

When a car insurance provider has made a decision not to renew your policy once your current term expires, this is known as non-renewal. Car insurers can’t simply decide to stop covering you without giving you prior knowledge.

Each state dictates a specific amount of time in which companies must provide you with written communication as to why they’re no longer insuring you.

In many cases that will be around 30 days, but, depending on where you live, that could be more or less.

So, why would a car insurance company choose not to renew your coverage? We’ll start with some of the not-so-good reasons:

Why your insurer won't renew you

If your insurance company sees your driving or your personal behaviors as risky, they will be far less willing to make the financial gamble to insure you.  Some “red flags” will include

  • Your driving record, particularly if that includes a high number of tickets or accidents
  • Multiple violations
  • At-fault claims
  • Non-payment/lapses

Keep in mind, a non-renewal and a cancellation are not the same things. According to the Insurance Information Institute (III), a provider can choose to cancel your coverage for failing to pay your premium, having a revoked or suspended license, or committing fraud, or making “serious misrepresentations” on your insurance application.

Other Reasons for Non-renewal

As we mentioned earlier, the reasons behind a non-renewal aren’t always reflective of the driver. Other reasons an insurer may choose not to renew include:

  • They’ve stopped providing certain coverages or plans
  • You’ve purchased a new car that they do not cover
  • You’ve moved to a new city or state where they do not provide coverage

In instances like this, non-renewal isn’t a strike against your personal record, and you likely won’t face rate hikes as you switch providers.

What should I do if my car insurance company drops me?

The first thing you should do if you get a notice of non-renewal is to reach out to your provider. This is your car insurance we’re talking about, so you want to make sure you completely understand the reasons behind your provider’s decision not to renew.

If you believe the reason for non-renewal is unfair or erroneous, still reach out to your provider. If you can’t reach a resolution with your insurer, move to contact your state’s insurance department.

No matter what, you will want to begin shopping rates. Remember, you need to be insured, and time is not on your side. Move to secure a new provider as soon as possible.

Finally, if your non-renewal is a result of your driving, you may need to seek out high-risk insurance.  You can begin by asking your provider if they offer any high-risk options. If they don’t, contact your state’s department of insurance to obtain a list of high-risk insurance providers.

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Switching Car Insurance Companies

Sometimes, your current car insurance provider just isn’t cutting it. Maybe your rates have gotten too high. Or maybe, you just want more options.

Whatever the reason for a switch in car insurance, know this – how you make the switch will be just as important as your “why.”

Making sure you don’t lapse in coverage will be paramount. Keep reading as we shed more light on how to properly – and painlessly – switch providers.

Should I change my car insurance?

First thing’s first – is changing providers even in your best interest? In many cases, it will be, and it’s not always about money. We’ve gathered a list of some of the top reasons why you may want to consider switching car insurance companies:

Reasons to Switch Car Insurance Companies

While this, of course, isn’t an exhaustive list, they’re all important factors to consider:

Better rates. Saving money will always be a no-brainer. And the fact of the matter is, a lot can change in your day-to-day life that can warrant higher, or lower, rates from various providers. A good rule of thumb will be to shop rates every six to twelve months to ensure you’re getting the most bang for your buck.

Moving to a new city or state. In some cases, you’ll have to choose a new provider simply because they don’t provide coverage in the area you’re moving to. However, sometimes a move can result in different rates simply because you’re in a different location.

With factors like crime rate, population, and varied state car insurance laws to consider, it will be worth it to take some time to shop rates in a new location.

Car depreciation. As your car depreciates in value, your rates should also reflect a decline. As suggested in the video below, be sure to check with your current provider – and others – to see if they’ll factor in your car’s current value into their calculations.

You got a new (or different) car. The make, model, and year of your car will have great bearing on your rates. According to Kelly Blue Book, factors that insurers will consider include your car’s horsepower, and whether it’s regularly targeted by thieves.

Life changes.  This can include anything from adding a new driver to your policy, getting married (or divorced), moving into a new home, or getting older (especially if that means you’re moving out of a high-risk category).

Better discounts. Even though most major insurers offer a variety of discounts, certain companies will offer discounts that are better tailored to your needs.

Customer service. How drivers are treated by agents and representatives is important. And for some, one bad experience can mean the difference between being a loyal customer and shopping for other options.

How do I cancel my car insurance to switch companies? (Step-by-Step Guide)

Once you’ve determined that you want to switch car insurance providers, it’ll be important that you follow the necessary steps.

Canceling and Switching PoliciesDetails
Collect important informationYour current policy number, identifying information
(name, number, address, etc.), and
new policy information (including the start date)
Contact your providerOptions may include by phone, email,
mail, or online
Or, ask your new provider to cancelYour new insurer may offer to contact your previous insurer
Provide an end-date
and a start date
with no gaps
Not providing an end date can result in unnecessary charges.
Not providing a start date could lead to a lapse.
Fill out necessary paperworkSome insurers may require you to fill out and sign documents
verifying cancellation of coverage
Check for fees and paymentsSome insurers will have cancellation fees
You may be entitled to a refund if you've made advanced payments
Make sure you put an end to automated bank drafts
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Before you make contact with your current provider, make sure you gather pertinent information and documents. This will include:

  • Your current policy number
  • Identifying information, such as your name, phone number, and address
  • Your new policy information, including the company name, policy number, and the date your new policy will begin.

Next, you’ll want to contact your provider. Although some providers will provide options that include sending in a letter or going online, we highly recommend making personal contact with an agent or representative. This can help remove a lot of confusion, and give you the opportunity to talk through the process.

Another option? Have your new provider contact your current provider. In fact, many companies will offer to send in your in cancellation request to your soon-to-be-former provider on your behalf, so that you don’t have to.

No matter who you’re dealing with, be sure to provide an end date to your current coverage, and a start date to your new coverage, with no gaps.

  • Not providing an end date could result in having two concurrent policies and bills.
  • Not ensuring that your old policy ends when your new policy starts could result in lapsed coverage.

Fill out all of the necessary paperwork. For some providers, the cancellation won’t be “official” until you’ve signed a formal document. Be sure to do so in a timely matter.

Cover your financials. That is,

  • Find out whether your provider charges a fee for cancellation.
  • Find out whether you’re due a refund for any payments that extend past the last day of your policy
  • If you have automated bank drafts, make sure they end in conjunction with your end date

Something else to keep in mind – if your vehicle is financed or leased, be sure to ask your insurer to make contact with the proper institutions. If they do not, make contact on your own.

Finally, once you’ve reached the cancellation date for your old policy, be sure to double-check that it is canceled.

Best Ways to Pay for Your Car Insurance

When it comes to how you can pay for your policy, we have good news – you have options. The key will be in finding what works best for you and sticking to it.

Ways to Pay for
Your Car Insurance
Pay in FullSome offer paid-in-full discounts
Electronic Funds Transfer (EFT)"Set it and forget it"
Some offer EFT discounts
Pay MonthlyA variety of payment options
OnlineThrough a website or app
By PhonePay with agents, representatives, or
automated systems
By MailUsually by check or money order
In PersonWith an agent or representative
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For many, paying their policies in full will be the easiest option. As an added incentive, many providers will also offer a discount to those willing to pay the full amount upfront.

If you prefer to make monthly payments on a “set it and forget it” basis, Electronic Funds Transfer (EFT) is another option. This entails allowing your provider to automatically withdraw payments from your checking, savings, or credit card.

Not all providers will offer the option of paying by credit card. Additionally, some providers will charge a fee for automated payments, while others may offer a discount.

Drivers who choose to make monthly payments manually are often afforded a variety of payment options, including checks, credit cards, cash, and money orders. Most major insurers offer the ability to make payments online, and even through their mobile app.

If you prefer to pay by phone, a number of companies will allow you to dial in your payments through an automated system or with an agent.

“Snail mail” is also an option for those who prefer to send in a check or money order.

Finally, you may have the ability to pay your agent or representative in person.

Keep in mind, not all options will be available with every provider. Be sure to inquire about payment options early in the game, and choose what will be easiest for you to maintain.

FAQs: How to Renew Your Car Insurance

When it comes to renewing your car insurance, you may have additional questions. Among them,
Can I change my car insurance, even before renewal?
Will my policy number change as each time I renew? 
The good news? We have answers. Keep reading as we tackle your frequently asked questions.

Can I change my car insurance at any time?

Drivers have the right to switch car insurance providers at any time, even if it’s not time to renew. You’ll just want to keep the following in mind:

  • Your provider might charge a cancellation fee.
  • Your provider might also require you to pay a percentage of your remaining balance.

As an example, let’s say your insurer charges 10 percent of your remaining balance. If you have $500 left on your policy, you’ll have to pay a $50 fee.

Something else to keep in mind? Some providers will also give you a prorated refund for what you’ve already paid. Because procedures vary from company to company, you’ll want to make contact with a representative to learn more.

Do I have to pay a deposit to renew?

A number of insurance companies will require a deposit from new customers as they begin their initial policies. This could be a percentage of the premium or the first month’s payment. However, as renewal time comes around, insurers will not ask for another deposit. Rather, you are expected to continue making your regular payments, on time.

Can I renew my car insurance early?

When it comes to when you can renew, that process is governed by the insurer, not by the driver. However, you are able to make changes mid-policy, as needed. That could include changing vehicles, moving, or adding another driver. Keep in mind that as you make changes, your rates will likely change – for better or worse.

Will my policy number change when I renew my insurance?

As you continue to renew your car insurance, your policy number will remain the same. This becomes a plus as you become a long-time customer, and eligible for loyalty discounts.

An instance where your policy number might change is if it gets canceled. If you wait past a certain point to reinstate your policy, your insurer may decide to start fresh with a new policy and number.

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Renewing Your Car Insurance: The Bottom Line

Renewing your car insurance is easily one of the most important things you can do as a car owner, aside from securing the actual policy. Think about it. Each time you renew, you’re making the important decision to extend your coverage from one term to the next.

In the end, this not only ensures that you’re meeting your state’s legal requirements, but it also ensures legal and financial protection in the face of an accident.

Once it’s time to renew, a lot can happen. Your rates may increase. Your provider may decide to drop you. Or, you may be in danger of missing your next payment.

Whatever the scenario, your primary response should always be to contact your provider and ask questions. This not only keeps you “in the know,” but who knows – what began as a difficult situation may turnaround for the best.

Finally, renewal may be the motivation you need to seek out a new provider. After all, you’ll never know what options, opportunities, or savings await until you ask. Begin your search now by taking advantage of our free car insurance comparison tool.

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