Renewing Your Car Insurance Policy

Except for the relatively new practice of issuing car insurance policies that pay as they go, you enter into a fixed-term contract with your car insurance company when you buy car insurance. This fixed term lasts for one year in most cases.

Your insurance company will offer you a renewal contract when the coverage period is nearing its end. The renewal process is now initiated by large car insurance companies. This usually involves the creation and posting of renewal documents to policyholders. The invite to renew packet is typically sent out around 15 days before the end of an existing car insurance contract. This gives the potential renewal policyholder enough time to contact the car insurance company to inform them about any changes which may have occurred.

You are legally required to notify the insurance company if you plan to renew the same policy with the same company.
You may also wish to modify or add coverage to your current car insurance policy. Your needs may have changed in the past year.

Third party car insurance is compulsory. There are no grace days after the policy renewal date. Car insurance companies may have problems with this because renewal documents and certificates must be prepared and sent to prospective policyholders in advance. They will then become effective from the first day of each new period.

A renewal certificate is required by law to tax a motor car. It cannot be issued until the premium has been paid. If payment was not received by the expiry date on the existing car insurance plan, the renewal certificate would need to be re-written to reflect the operative date and time. This could be a major problem to car insurance companies. To issue an unaltered car insurance certificate would be to ante-date it, which is a criminal offense. Furthermore, rewriting renewal documents would incur additional costs and expenditures for the car insurer. Additionally, gaps in coverage for policyholders would create risks for drivers who drive without car insurance.

To overcome the difficulties associated with renewals, car insurance companies have adopted a practice of including in renewal documents a certificate proving that the policy is valid for a longer period of seven to 15 days. The insurance company and the prospective renewal are both benefited by this practice. They can extend the time the insured has to pay the renewal premium but still receive a certificate that is valid for the new contract period.

Car insurers are sensitive to what is known to be the’renewal retain ratio’, or the number of renewals expressed in percentage of all previous years’ total policies issued. Online car insurance underwriting has allowed prospective renewals to shop around more easily and maybe change suppliers.

This temporary certificate of coverage in effect and contract law is an offer from the car insurance company. The insured must accept it either by paying the renewal premium or implicitly by doing nothing. The premium will be taken from the payment source for the previous year’s policy.

However, if the prospective renewal does not obtain car insurance coverage elsewhere or through some action such as a phone call, it would be considered invalid. A policyholder who does not receive the renewal certificate and quote, or is unaware of the terms of the renewal notice, cannot accept an offer. He can also get a full refund if the money was debited from his bank account.

There are many options online for car insurance. These include specialist insurance plans for a specific group or aggregator comparison websites. Policyholders can save huge on renewal if they are willing to shop around for similar coverage. An offer to renew car insurance without considering other options may not be in the policyholder’s best interest. There are many different car insurance rates. Companies may offer to match or beat a renewal offer from another company if they pick up the telephone.