Most car insurance policies have a policy period lasting either six or 12 months, depending on the length the company offers and for which you signed up. The last day your policy is effective is called the expiration date, and at that point, you can renew your policy.
Most auto insurance companies offer automatic renewals, meaning that if you wish to continue coverage, simply take no action to stop the renewal and continue making your payments. If you are enrolled in autopay, the insurer will take your scheduled payment via the method on file (your credit card, checking, savings or debit information). As long as you are in good standing, your car insurance company is likely to automatically offer you a policy for the next term. This is convenient for many, as it is low-hassle; it's not necessary to fill out any more paperwork or take any action to ensure that they remain covered.
Typically, about a month before your policy’s expiration date, your insurance provider will contact you with your renewal offer, with the same limits and parameters of the policy that you previously enjoyed. This message will contain your new policy documents: the new effective dates, the new declarations page and ID cards, and your new car insurance premium. Making your regular payment signals the insurer to automatically renew your policy and continue covering you. The possible danger in automatic renewals is that car insurance premiums can increase without you noticing, even if there is no change in coverage or driving history. It’s important to read the terms of the renewal offer carefully before the new policy begins.
What happens if I don’t renew my policy and my coverage lapses?
- If you begin your new coverage any time after the expiration date of the previous policy, there will be a lapse in coverage. You want to avoid a lapse in insurance coverage for several reasons:
- You are unprotected throughout the lapse period.
- A lapse in coverage can lead to higher premiums down the line.
- New insurance companies might offer discounts for continuous coverage over a certain length of time; if you lapse, you will not be eligible for this discount.
If your insurance provider does not automatically renew your policy and you let your policy expire before purchasing another, you will also experience a lapse in coverage. From the day your policy expires to the effective date of a new policy, you will not be covered and should not drive your vehicle. If you decide you want to renew your previous policy after all, your insurance agent may be able to reinstate your policy, though you may be subject to a penalty fee. If reinstatement is not an option, it’s time to shop for car insurance online.
For more information, contact Lallis & Higgins Insurance.