{"id":12614,"date":"2015-01-05T12:57:20","date_gmt":"2015-01-05T20:57:20","guid":{"rendered":"https:\/\/www.freeway.com\/?p=12614"},"modified":"2023-09-19T14:13:48","modified_gmt":"2023-09-19T14:13:48","slug":"automatic-renewal-of-auto-insurance-may-cost-you-money","status":"publish","type":"post","link":"https:\/\/www.freeway.com\/blog\/auto-insurance\/automatic-renewal-of-auto-insurance-may-cost-you-money\/","title":{"rendered":"Automatic Renewal of Auto Insurance May Cost You Money"},"content":{"rendered":"

You just received a letter from the insurance company letting you know that your annual <\/span>car insurance<\/span><\/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.<\/span><\/p>\n

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?<\/span><\/p>\n

Does car insurance automatically renew every year at a higher rate, or did your insurer boost the premium on your new policy?<\/span><\/p>\n

The answer to that last question is it\u2019s a little of both. But first, we need to cover the basics.<\/span><\/p>\n

What Is A Renewal Fee For Car Insurance And How Does It Work?<\/span><\/h2>\n

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.<\/span><\/p>\n

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.\u00a0<\/span><\/p>\n

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.<\/span><\/p>\n

How Insurance Companies Benefit From Automatic Car Insurance Renewal<\/span><\/h2>\n

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?<\/span><\/p>\n

Well, not entirely.<\/span><\/p>\n

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?<\/span><\/p>\n

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.<\/span><\/p>\n

Those assumptions are true for most drivers, especially those who have been with an insurer for a long time and <\/span>are happy with the coverage they have<\/span><\/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.\u00a0<\/span><\/p>\n

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.<\/span><\/p>\n

Loyalty, Discounts, and Deals: The Costly Assumptions Drivers Make About Insurance Companies<\/span><\/h2>\n

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.<\/span><\/p>\n

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?<\/span><\/p>\n

Well, it\u2019s a mixture of the following reasons:\u00a0<\/span><\/p>\n