{"id":10776,"date":"2015-01-05T21:28:00","date_gmt":"2015-01-05T21:28:00","guid":{"rendered":"https:\/\/www.freeway.com\/knowledge-center\/?p=10776"},"modified":"2025-01-17T19:50:59","modified_gmt":"2025-01-17T19:50:59","slug":"automatic-renewal-of-auto-insurance-may-cost-you-money","status":"publish","type":"post","link":"https:\/\/www.freeway.com\/knowledge-center\/auto\/automatic-renewal-of-auto-insurance-may-cost-you-money\/","title":{"rendered":"Automatic Renewal of Auto Insurance May Cost You Money"},"content":{"rendered":"\n<p>You just received a letter from the insurance company letting you know that your annual <a href=\"https:\/\/www.freeway.com\/auto-insurance\/\">car insurance<\/a> renewal has been processed, and you\u2019re stunned to see that your policy\u2019s new premium is much higher than you thought it would be.<\/p>\n\n\n\n<p>You probably thought that rate would stay the same. Your driving habits haven\u2019t changed. You haven\u2019t caused or been involved in any major crashes lately \u2014 not even a minor fender bender. Nothing\u2019s changed during the past year, so what happened? What drove the premium up so much?<\/p>\n\n\n\n<p>Does car insurance automatically renew every year at a higher rate, or did your insurer boost the premium on your new policy?<\/p>\n\n\n\n<p>The answer to that last question is it\u2019s a little of both. But first, we need to cover the basics.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What Is A Renewal Fee For Car Insurance And How Does It Work?<\/h2>\n\n\n\n<p>When you purchase insurance for your vehicle, you are paying for a service with an established and valid time period. Most tend to be either for six months or a year. This means you will continue to be protected as long as you pay your monthly fees and are within your auto policy term.<\/p>\n\n\n\n<p>When the end of said term is approaching, your insurance provider will contact you and give you the option to continue with your coverage, upgrade or to decline the service. A very popular option for drivers is to opt for automatic renewal of their current policy, since it takes out the hassle of paperwork and such tedious tasks.&nbsp;<\/p>\n\n\n\n<p>You can keep making your payments and the policy will renew automatically. However, as you\u2019ll see in this article, continuing your service without informing yourself properly can lead to nasty and expensive surprises.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">How Insurance Companies Benefit From Automatic Car Insurance Renewal<\/h2>\n\n\n\n<p>You may not realize it, but automatically renewing your auto insurance policy every year with no questions asked may be costing you money. Sure, it\u2019s so much easier to let your auto insurance company take control and just opt for the policy renewal when it\u2019s due. After all, your insurer has your best interests at heart, right?<\/p>\n\n\n\n<p>Well, not entirely.<\/p>\n\n\n\n<p>Many insurance companies count on their customers\u2019 automatic acceptance of what\u2019s on the printed page to charge them anything they want. How do they get away with this?<\/p>\n\n\n\n<p>They get away with it because these companies know that the average adult doesn\u2019t want to spend their time scouring the internet for a lower price \u2014 not even after receiving a 30-day renewal notice from the insurer by mail. They know it\u2019s much easier for the average driver to stick with the same insurer rather than devote time and energy to sift through all the different insurance carriers on the market.<\/p>\n\n\n\n<p>Those assumptions are true for most drivers, especially those who have been with an insurer for a long time and <a href=\"https:\/\/www.freeway.com\/knowledge-center\/auto\/what-is-liability-auto-insurance\/\">are happy with the coverage they have<\/a>. It\u2019s estimated that roughly 39% of U.S. drivers have been with the same auto insurance company for at least three years, while around 5% have been with their provider for ten years or longer. Great customer service, a no-hassle claims process, and an easy-to-use platform are all things that lead to customer satisfaction and loyalty.&nbsp;<\/p>\n\n\n\n<p>These drivers have likely built a rapport with the agents that handle their policy and just assume the agents are taking great care of them \u2014 they are, though not entirely in the drivers\u2019 favor.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Loyalty, Discounts, and Deals: The Costly Assumptions Drivers Make About Insurance Companies<\/h2>\n\n\n\n<p>Most drivers don\u2019t bother checking their renewal rates before the auto policy restarts. It\u2019s estimated that around nine million people \u2014 or roughly 27% of drivers \u2014 typically keep their auto insurance policies as-is every year, relying on the automatic car insurance renewal process. That means that at the end of the policy period, the original policy simply restarts, and the new policy usually has a slightly higher premium rate and a car insurance renewal fee tacked on.<\/p>\n\n\n\n<p>Many policyholders don\u2019t see these charges till they get their first car insurance bill in the mail. The unexpected, higher rate often comes as a shock, but the truth is they inadvertently let it happen. How?<\/p>\n\n\n\n<p>Well, it\u2019s a mixture of the following reasons:&nbsp;<\/p>\n\n\n\n<ul>\n<li>Drivers believe that their current insurer is providing them with a good deal and would continue to do so, so they never feel the need to contact their insurance agent, especially when car insurance renewal time rolls around.<\/li>\n\n\n\n<li>Drivers assume they\u2019re getting the best coverage options with their current insurer, so they don\u2019t research other coverage plans with competing insurance companies.<\/li>\n\n\n\n<li>Drivers believe their insurer rewards customer loyalty by offering discounts and deals on existing policies, so they don\u2019t question price changes.<\/li>\n\n\n\n<li>Drivers don\u2019t want to go through the ordeal of finding a new provider or checking up on their current one because they find it isn\u2019t a simple process and don\u2019t consider themselves knowledgeable enough to make an effective cost-saving switch.<\/li>\n\n\n\n<li>Drivers simply forget to call their insurance company before their policy is set to renew.<\/li>\n<\/ul>\n\n\n\n<p>It\u2019s easy to understand why most people neglect following up on their insurance coverage. The only way to avoid unnecessary charges and higher rates, though, is by being proactive about your policy.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Factors That Affect Your Annual Premium<\/h2>\n\n\n\n<p>A car insurance policy typically covers you for a year. Here\u2019s a brief look at the <a href=\"https:\/\/www.freeway.com\/knowledge-center\/auto\/lower-car-insurance\/\">factors that typically affect your insurance rate<\/a> during a 12-month period, which may affect the rate you pay when your car insurance renewal period rolls around.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Your Age and Driving Experience<\/h3>\n\n\n\n<p>When you\u2019re a driver, the older you are, the more experience you\u2019ve got behind the wheel \u2014 that\u2019s what insurance companies typically presume. It\u2019s the reason why older drivers usually pay less for car insurance than younger ones.<\/p>\n\n\n\n<p>What if two drivers are the same age? Will they both have to pay the same rate? Not necessarily. In this case, driving experience determines the rate each driver will pay. For example, between two 30-year-old drivers with comparable, clean driving records, the one who\u2019s had their driver\u2019s license longer will likely pay a lower car insurance premium.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Your Driving History and Credit Score<\/h3>\n\n\n\n<p>The cleaner your driving record, the lower your car insurance premium will be. A squeaky-clean record means you haven\u2019t had any traffic tickets, at-fault crashes, or convictions during the past three to five years, which is how far back insurance companies typically look when they\u2019re calculating your premium. Be aware, though, that serious violations, like <a href=\"https:\/\/www.freeway.com\/dui\">DUI<\/a>s and license suspensions, may stay on your record longer, sometimes permanently showing up in background checks.<\/p>\n\n\n\n<p>If you\u2019ve received a penalty in the past for driving without proof of insurance, this can also have a negative effect on how economical your car insurance is.&nbsp;<\/p>\n\n\n\n<p>You can always work to <a href=\"https:\/\/www.freeway.com\/knowledge-center\/auto\/drivers-license-points\/\">improve your record<\/a> by taking a driver safety course and changing your driving habits, and being more cautious when you\u2019re behind the wheel.<\/p>\n\n\n\n<p>Regarding your <a href=\"https:\/\/www.freeway.com\/knowledge-center\/auto\/is-my-credit-affecting-insurance-rates\/\">credit score<\/a>, some insurance companies offer discounts if your rating\u2019s good \u2014 the higher the score, the better. Paying your bills, credit cards, and car loans on time is a surefire way to boost your credit score and, ultimately, lower your annual car insurance premium. Depending on the state you live in, your credit score might not be a determining factor \u2014 some states don\u2019t allow insurance agents to use it as a factor.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">The Make and Model of Your Vehicle, How Often You Drive It, and What Roads You Take<\/h3>\n\n\n\n<p>How much you pay for coverage depends on the risks involved in driving your motor vehicle. A small sports car or convertible that maneuvers quickly through traffic or an expensive luxury car will make your premium skyrocket because the risk for crashes and theft is much higher for these vehicles. By contrast, a sedan or SUV that has received high marks for safety will cost less to insure.<\/p>\n\n\n\n<p>How often you drive and where also play a role in determining your rate. If you have a long commute to work that requires you to drive in dense morning and afternoon rush-hour traffic daily on busy highways and roadways or you like to take long road trips often, you\u2019ll likely pay a higher premium than someone who limits their drive time to running errands near their home.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Where You Park Your Vehicle<\/h3>\n\n\n\n<p>If you park your car, truck, or SUV in a garage while you\u2019re at home, you\u2019ll likely pay a lower annual premium than someone who parks their vehicle along the curb outside their house. Why? Because a garage not only shields your vehicle from rain, hail, tree branches, and other natural elements, but it also lowers the risk of your car, truck, or SUV being sideswiped by a passing driver.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Where You Live<\/h3>\n\n\n\n<p>Your home address is another piece of personal information that affects your payment. If you live in an area with a lot of crime or a neighborhood with a high volume of traffic and crashes, you\u2019ll probably have to pay a higher premium. This can also work the other way around. For example, if you move from a high risk area to one with less incidents, you can positively affect your premium.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Whether You Have an Auto Club or Association Membership<\/h3>\n\n\n\n<p>Many car insurance companies offer discounts to policyholders who are members of auto clubs and associations, like AAA or the AARP. Veterans or military members who are in active duty are also eligible for car insurance discounts. It\u2019s worth contacting your insurer or broker to ask if you qualify for a discount on your current car insurance policy.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Industry Changes<\/h3>\n\n\n\n<p>While this is harder or totally out of your control, unfortunately it also reflects on your payment. An instance would be like the one mentioned above: if your zip code now corresponds to an area that increased its crime rate, you\u2019ll see a higher premium. Also, if the insurance industry needs to recover from market losses, car insurance rates could very well be affected.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What You Can Do Before Your Annual Car Insurance Renewal Resets<\/h2>\n\n\n\n<p>As we\u2019ve already discussed, waiting till the last minute to contact your insurer isn\u2019t a good move. Your best bet is staying ahead of the insurance company, knowing what coverage options you have, which ones you need, and when your policy renewal date is.&nbsp;<\/p>\n\n\n\n<p>Here are a few things to keep in mind before you contact your insurer. These tips are aimed at helping you keep your annual premium low with the right amount of coverage.<\/p>\n\n\n\n<ul>\n<li>Contact your insurance company any time you have questions or concerns about your policy. Don\u2019t think doing so will hurt your loyalty status. It won\u2019t. Besides, you\u2019re the one paying for coverage. Asking thorough questions about your policy is your right.<\/li>\n\n\n\n<li><a href=\"https:\/\/www.freeway.com\/knowledge-center\/auto\/\">Never lie to your insurance company<\/a> about where you live or where you keep your car \u2014 that\u2019s considered fraud. If the insurance company finds out that you knowingly gave it false information, it will likely drop your coverage. It may even refuse to process your claim if you\u2019re involved in a car crash.<\/li>\n\n\n\n<li>If you don\u2019t want to speak with an agent and have an online account with your insurance company, log into your insurer\u2019s website and see if there\u2019s a \u201crenew<a href=\"https:\/\/www.freeway.com\/knowledge-center\/auto\/benefits-buying-online-car-insurance\/\"> car insurance online<\/a>\u201d option. If so, you might be able to review your coverage on your own without an agent persuading you to consider additional options you might not need.<\/li>\n<\/ul>\n\n\n\n<p>It may seem like a burden, but reviewing your car insurance policy every once in a while and calling your agent to ask what can be done to lower your rate will give you a better idea of how far your insurer will go to keep you as a customer.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Contacting Your Insurance Company Regularly Helps&nbsp;<\/h2>\n\n\n\n<p>It\u2019s estimated that roughly 24% of drivers care enough about what they\u2019re paying to bother checking any changes in coverage or the policy itself for discrepancies that could cost them money.<\/p>\n\n\n\n<p>As we mentioned earlier, some of the most common reasons for not switching providers or checking up on policy changes before the car insurance renewal period rolls around appear to be attributed to:<\/p>\n\n\n\n<ul>\n<li>An unwillingness to make an effort,<\/li>\n\n\n\n<li>A lack of knowledge, or<\/li>\n\n\n\n<li>Both of these reasons.<\/li>\n<\/ul>\n\n\n\n<p>Most policyholders don\u2019t realize that this can end up costing them a decent amount of money on their premiums. The coverage they have may also be outdated, providing inadequate protection in the event of a serious accident.<\/p>\n\n\n\n<p>When you don\u2019t review your policy options often or contact your insurance agent regularly, you may forget what coverage options you <em>do<\/em> have. For example, your car might break down along the side of a highway, rendering you in need of roadside assistance. You might assume your policy covers hiring a towing company to transport your car to a mechanic, only to find out it doesn\u2019t, leaving you high and dry with the bill.<\/p>\n\n\n\n<p>Other coverage options, like <a href=\"https:\/\/www.freeway.com\/auto-insurance\/coverage\/rental-car-reimbursement\/\">rental car reimbursement coverage<\/a> and various money-saving discounts, may be missing from your policy, too. For example, your vehicle might be insured for only its actual <a href=\"https:\/\/www.freeway.com\/knowledge-center\/auto\/types-of-coverage-replacement-value-vs-actual-cash-value\/\">cash value instead of its actual replacement value<\/a>, which is preferable.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">I Have All The Information And I Want To Decline<\/h2>\n\n\n\n<p>Don\u2019t be afraid to <a href=\"https:\/\/www.coverage.com\/insurance\/auto\/car-insurance-renewals\/\" target=\"_blank\" rel=\"noopener\">decline the automatic car insurance renewal<\/a> after the insurer sends you a 30-day notice alerting you that it\u2019s going to reset. You have the right to shop around for coverage with competing insurance companies.<\/p>\n\n\n\n<p>It\u2019s important to give notice to your insurance provider before your policy expires. Not only that, but it should be sure to do it before your automatic payment is done, otherwise it could be renewed automatically and can incur on cancellation fees. Take note of the cancellation methods your insurance company allows, like phone or mail.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What Happens If I Don&#8217;t Renew My Insurance On Time?<\/h2>\n\n\n\n<p>In case you didn\u2019t automatically renew but the expiration date of your policy passed, you\u2019ll probably have to pay a cancellation fee. Depending on your provider and the elapsed time, it might be easier to hire a completely new one. Remember, if your car insurance has expired, you are unprotected. Don\u2019t drive without it!<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Don\u2019t Wait for Your Car Insurance Renewal Period to Roll Around<\/h2>\n\n\n\n<p>At some point, you\u2019ve likely wondered, \u201cWhy am I paying so much for car insurance?\u201d Odds are, you ask yourself this question whenever your automatic car insurance renewal period rolls around.<\/p>\n\n\n\n<p>The biggest takeaway here is that you should never take anything for granted, especially when it comes to the annual premium you pay to insure your vehicle.<\/p>\n\n\n\n<p>Getting ahead of your insurance company and contacting an agent to review your policy <em>before<\/em> it\u2019s renewed automatically can save you a good chunk of money. It can also help you ensure that you\u2019re getting the best rate on your auto insurance.<\/p>\n\n\n\n<p>Remember: the choice is yours and it has never been easier to shop around and save on your car insurance. Luckily, at Freeway we are experts at finding and providing the best coverage for your needs and budget. So, while you\u2019re here, why not get a free auto insurance quote today? Give us at a call at (800) 777-5620 or discover an <a href=\"https:\/\/locations.freeway.com\/?_ga=2.66060398.1908044027.1647971706-981848019.1639342009\" target=\"_blank\" rel=\"noopener\">office near you<\/a>.&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>You just received a letter from the insurance company letting you know that your annual car insurance renewal has been processed, and you\u2019re stunned to see that your policy\u2019s new premium is much higher than you thought it would be. You probably thought that rate would stay the same. Your driving habits haven\u2019t changed. You [&hellip;]<\/p>\n","protected":false},"author":1002630,"featured_media":11318,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5],"tags":[],"importance":[],"type-content":[],"acf":[],"_links":{"self":[{"href":"https:\/\/www.freeway.com\/knowledge-center\/wp-json\/wp\/v2\/posts\/10776"}],"collection":[{"href":"https:\/\/www.freeway.com\/knowledge-center\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.freeway.com\/knowledge-center\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.freeway.com\/knowledge-center\/wp-json\/wp\/v2\/users\/1002630"}],"replies":[{"embeddable":true,"href":"https:\/\/www.freeway.com\/knowledge-center\/wp-json\/wp\/v2\/comments?post=10776"}],"version-history":[{"count":1,"href":"https:\/\/www.freeway.com\/knowledge-center\/wp-json\/wp\/v2\/posts\/10776\/revisions"}],"predecessor-version":[{"id":10777,"href":"https:\/\/www.freeway.com\/knowledge-center\/wp-json\/wp\/v2\/posts\/10776\/revisions\/10777"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.freeway.com\/knowledge-center\/wp-json\/wp\/v2\/media\/11318"}],"wp:attachment":[{"href":"https:\/\/www.freeway.com\/knowledge-center\/wp-json\/wp\/v2\/media?parent=10776"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.freeway.com\/knowledge-center\/wp-json\/wp\/v2\/categories?post=10776"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.freeway.com\/knowledge-center\/wp-json\/wp\/v2\/tags?post=10776"},{"taxonomy":"importance","embeddable":true,"href":"https:\/\/www.freeway.com\/knowledge-center\/wp-json\/wp\/v2\/importance?post=10776"},{"taxonomy":"type-content","embeddable":true,"href":"https:\/\/www.freeway.com\/knowledge-center\/wp-json\/wp\/v2\/type-content?post=10776"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}