Should I Automatically Renew my Policy?

Should I Automatically Renew my Policy?

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Many home owner insurance and car insurance companies offer their customers the option to automatically renew insurance policies when it becomes due. It’s nice to know that you won’t find yourself without insurance because you neglected to renew, but the main benefit goes to the insurance company. With automatic renewal, they keep you as a customer. If you’re happy with your insurance company and they haven’t raised your rates at the end of each policy period you may never bother to take the time to compare policy prices with other companies, and this could be costing you money because you are paying too much for the coverage that you have.

Some Things to Consider

If your circumstances have changed in any way since you first purchased an insurance policy, you may want to take the time to shop around well before the insurance that you have in place is due for renewal. If you purchased a new vehicle and simply contacted your car insurance company to switch the coverage, you may not have taken the time to do the proper comparison shopping.

The amount of coverage that you carry on your home should also be reconsidered from time to time. As you continue to enjoy your home, you are probably making changes that increase the market value of your home. The contents of your household are changing as you replace your appliances and buy new furniture. Make sure that the amount that you are insured for covers these changes so that if a claim has to be made, you have enough of the right type of insurance.

Potential Scenarios

Mistakes can be made in the paperwork of the insurance company as easily as they can be made in any other business. Although the company should notify you about a month before your policy expires that it will be up for renewal, there are many reasons why you don’t get the information. It’s up to you to make sure that if the company deducts the premium from your bank account that the money is there for them to take out. You need to be sure that the transaction won’t cause an overdraft that will cost you not only your policy, but any fees that your financial institution charges you.

In some cases, a policy that you thought would be automatically renewed isn’t. A clerical error in the insurance office may be responsible. You won’t know that you’re not insured until you need to file a claim or a police officer asks to see proof of car insurance. Even though an automatic renewal of the policy should be stress free, don’t assume that it will always go as planned. Make a note on your calendar to double check that the policy is renewed as you had planned.

Even if your insurance policies can be automatically renewed, you’re not stuck having to keep the same insurance company. If you make the time to research other insurance companies and are able to find one that gives you the insurance protection that you need at a better price, you are free to switch. Call the company that is now providing the coverage and tell them when to cancel your policy. Ask for written documentation that the policy will be cancelled on that date.

When your new policy has gone into effect, check to make sure that the old policy is cancelled and that you are no longer being charged for it. There is no reason that you should carry two separate policies and certainly no reason to pay for double coverage.