Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health insuran...

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager Chris Harrigan

UPDATED: Sep 22, 2020

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Here's what you need to know...

  • Auto insurance policies are sold in either 6-month or 12-month terms
  • The term is the period of time that your rates will remain level as long as you don’t make changes to your policy that change your risk profile
  • On your declaration’s page, you’ll find an expiration date. This is also the date that your policy will renew if you decide to stay with the same insurer

Car insurance policies don’t last forever. When you purchase a policy, both you and the insurance company are in a contractual agreement for a period of either 6 or 12 months at a time.

After that term is up, the insurance company has the right to reassess you as a client and decide whether or not they’d like to keep doing business with you.

If you don’t take action when your policy approaches renewal, your coverage could expire.

Some companies offer automatic renewals and others don’t. Compare car insurance rates now by using our FREE tool! Enter your zip code above!

Why is car insurance sold in terms?

It’d be nice if you could buy insurance that stayed level in price forever. Unfortunately, this isn’t how the industry works.

Car insurance companies must cover expenses and other charges in the premiums that they collect.

Since costs and risk exposure changes on a regular basis, the company must reassess regularly.

Selling auto insurance policies in terms that last for either 6 months or 12 months at a time helps you budget for a stated period of time while still protecting the insurer.

The company has the right to underwrite your risk before your policy is issued and can then look back and make a new decision either 6 months or 1 year down the line.

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When are car insurance renewals processed?

Every state has different laws that state how much advance notice an insurer is required to give when your renewal rates will change or when the carrier is processing a non-renewal.

In most cases, you will be mailed a copy of your new declarations page and an invoice about 30 to 45 days before the expiration date.

What might happen at your renewal?

A lot of things can happen when your policy renews. Your rates can go up, they can go down, or the company might decide that you’re now too great of a risk.

If the company doesn’t want to offer you coverage past your expiration date, they’ll send you a non-renewal notice complete with a reason.

Here’s some changes that can affect rates:

  • If you have an at-fault accident, the surcharge could be added at renewal
  • If you or another driver has been convicted of a moving violation, the surcharge could be added at renewal
  • If you have multiple accidents or convictions, you could lose your good driver discount at renewal
  • If there’s a new member of the household, the driver could be rated
  • If an accident or violation falls off the policy, your rates could go down
  • If a young driver gains experience, your rates can go down

When do policies automatically renew?

Not all car insurance policies renew automatically. If you pay your insurance in full, you’re going to need to submit your payment for your new premiums or your coverage could lapse.

You also need to take action and make a payment if you pay your premiums manually each month or quarter.

If you already have automatic payments set up, there’s a good chance you’ve given the company the right to collect payment from your card even when the renewal comes.

It’s important to look at your new rates closely so that you can decide if it’s time to shop around.

When you receive new rates that are 10, 20 or 30 percent higher, it can be a major shock.

Instead of just accepting the increase, shop around and look for better options with competitors in the marketplace. Use an online internet quoting tool and compare a handful of rates at a time.

Once you see the instant quotes, you’ll be able to choose the best option.

Enter your zip code below in our FREE tool below to compare car insurance rates instantly!


  1. https://www.irmi.com/online/insurance-glossary/terms/d/declarations.aspx
  2. https://www.thebalance.com/what-is-an-insurance-renewal-527419
  3. https://www.iii.org/article/is-there-a-difference-between-cancellation-and-nonrenewal
  4. https://www.msn.com/en-us/money/autoinsurance/12-things-your-auto-insurance-agent-knows-that-you-dont/ar-BB7QdgM
  5. https://www.consumerwatchdog.org/feature/20-good-driver-discount
  6. https://www.esurance.com/insurance/car/compare-quotes