Can a Car Insurance Company raise premiums or cancel coverage midterm?
Car insurance premiums are primarily based on risk but they are also affected by car insurance laws. Most car insurance coverage is offered in 6 month terms (a handful of car insurers offer 12 month policies) and a common question asked by many drivers is why can I only buy a 6 month policy?
“Most States have laws forbidding any auto insurance company from taking action against you while a policy is in force”
This action could mean increasing your rates, canceling your coverage or changing the terms of your policy. All of which are illegal in most states and the biggest reason why car insurance companies only offer short term policies. Most drivers will never experience any denial of coverage or significant increase in rates (assuming they maintain a good driving record) however since car insurance companies are limited in how they can adjust for risk should an accident or other high-risk incident happen during the course of your policy they limit their exposure to simply offering short term policies.
Do I have to get new car insurance every 6 months?
No. Most auto insurers simply opt to renew your policy and send you a new policy in the mail. Whenever you see an auto insurance renewal letter its also a good time to double check your policy for coverage and discounts and maybe even compare car insurance quotes before electing to insure with the same provider again. There are often many benefits for staying with the same insurer such as customer loyalty discounts but since your policy is ending soon (and you will have no liability for unpaid premiums if you go the term and opt not to renew) many drivers choose this window of time to compare car insurance quotes.
Can I pay more for a car insurance policy with a longer term?
To our knowledge the longest car insurance policy coverage you can buy is 12 months however it is an interesting concept which we expect some car insurance company to introduce in the future. Although rates would be higher obviously higher with a longer window of exposure this is a product which would have some demand in the marketplace.
Why do car insurance rates change when a policy is renewed?
The risk model car insurance companies use is ever-changing so anytime a policy is up for renewal drivers are subject to the current risk formula for calculating auto insurance premiums by that insurer. While most drivers will only see a minimal change it has been reported by some consumers that significant premium increases or decreases happened when their current car insurance policy came up for renewal. Think of buying car insurance as locking in a rate for 6 months – with new rates to be based on current market rates at the time of renewal.
How do I know if I have the Best Car Insurance Rates?
You probable never will however its imperative you do some kind of car insurance quotes comparison to make sure your premiums are in-line with market rates. Many drivers have never started a car insurance comparison search but rather simply use the local insurance agent they always have. While there is certainly peace of mind in using a friendly face its also the age of the internet where only a few moments can help provide a view of average car insurance rates for your profile. Car insurance comparison will not always save you money but it will re-enforce whether or not your current premiums are comparable to industry rates so engage the web today and compare auto insurance providers before renewing a policy.
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