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When does renters insurance automatically renew?
Most renters insurance policies automatically renew after one year of coverage. Expect your insurance company to send you a document called a renewal offer 30 to 60 days before the year-mark. This gives you time to look it over and decide whether the terms are still acceptable to you.
Your insurance renewal offer will include updated policy documents that list changes to your insurance. For example, they might include:
- A new premium that’s higher or lower than your previous one
- Changes you made to your renters insurance deductible
- Additional coverage you purchased with a rider
Although this document is called an “offer,” you don’t need to actively do anything to accept it. If your insurer doesn’t hear otherwise from you, they’ll automatically sign you up for another year and continue to bill you as normal.
Changing or canceling your policy during the renewal period
Many people take this chance to contact their insurer and update their policy terms — for example, by changing their deductible or adding more coverage.
Note that you can update your policy at any time. You don’t have to wait for it to renew. Many people just find the renewal period a convenient time to revisit their insurance coverage.
If you want to cancel your renter insurance, that’s a bit different — there are often good reasons to wait for the renewal period. Some insurers charge an early termination fee if you cancel your policy early. If that’s the case, the best time to cancel your policy is right before your renewal date.
Why does renters insurance automatically renew?
Automatic renewal is standard in the renters insurance industry. It ensures you won’t forget to re-up your policy, which keeps your coverage active and uninterrupted. In short, it saves you time and potentially a lot of money.
4 reasons that your renters insurance premiums may increase after a renewal
Even though your policy will automatically renew, that doesn’t mean its terms will be exactly the same. Your monthly premiums — the amount you pay to keep your coverage active — could increase.
Here are the most common reasons why this happens.
1. You filed a claim in the previous year
Filing a renters insurance claim usually causes your future premiums to go up.
From your insurer’s perspective, the more claims you filed last year, the more likely you are to file a claim this year. Raising your premium is how they “save up” for that future claim.
2. You had a lapse in paying your policy
Your insurer might also raise your premium if you missed a payment and let your policy lapse. (A lapse means that your coverage deactivated until you made the payments you missed.)
Lapses are bad news. In addition to leaving you vulnerable to major financial losses while you’re uninsured, they can prompt your insurance company to raise your rates. It’s another way insurers cover themselves against what they see as a higher coverage risk.
Premium increases due to non-payments don’t just affect your current policy, either. If you decide to switch insurers, another company might see that blip in your record and charge you more.
3. You committed insurance fraud or misrepresented yourself on your application
It’s easy to think of insurance fraud as something that only the super-rich are involved in, but it’s actually fairly common. Any time you lie on your insurance application, you’re technically committing fraud.
People tell “white lies” on their renters insurance applications all the time. They pretend to be non-smokers, or claim to have fire alarms when they don’t, and so on, with the goal of driving their premiums down.
Misrepresenting your situation like that can cause your insurer to sharply raise your premiums when they find out. That’s if they don’t cancel your policy outright. (Which is really the more likely outcome — many policies specifically note that providing false information will render the policy void.)
Also, as with payment lapses, a history of misrepresentation can cause future insurers to charge you more or deny you coverage outright.
4. You decided to cover more personal property, increase your liability coverage, or otherwise modify your policy
As with other types of insurance, your monthly renters insurance premiums depend on how much coverage you have. Contributing factors include:
- The amount of property you chose to insure
- Whether you chose actual cash value or replacement cost coverage for your items
- How much liability coverage you have
- Whether you added any endorsements to your policy to cover items or perils that wouldn’t normally be covered
- How high your deductible is
If you increase your coverage or choose a lower deductible, you’ll have to pay higher premiums when your policy renews. More coverage just costs more. It’s as simple as that.
Non-renewals: When does renters insurance not automatically renew?
If your insurer decides not to renew your policy, they’re obligated to notify you before your policy expires. The required amount of notice varies by state, and is often between 40 and 60 days.
Non-renewals are tightly regulated in the renters insurance industry. There has to be a good reason for an insurer to decline to renew your policy. Generally, they’ll only do so for one of the following reasons:
1. You filed too many claims
Insurers expect you to file claims rarely — maybe one claim in a decade. Anything more than that might raise some eyebrows in the insurance office.
If your claims are too frequent, your insurer might decide not to renew your policy. They’ll see you as too much of a risk. What’s worse, other insurers will see your multiple claims and might choose not to insure you either.
To avoid this, you should only file a claim when you actually need to. If you need help paying for a covered expense that you’d struggle to handle on your own, go ahead and file — that’s what insurance is for. But if it’s a relatively small expense that you can take care of without wiping out your savings, stop and think about whether making a claim is really worth it.
2. You’ve had multiple lapses in paying your policy
Everyone forgets to make payments once in a while (although auto-payment can help with that). But if you forget on multiple occasions, causing your policy to lapse repeatedly, your insurer might label you a risk and choose not to renew your policy.
This doesn’t mean that one missed payment will cause you to lose your policy. Most insurers offer 30-day grace periods, meaning that you have up to 30 days after your due date to pay before your policy will lapse. But don’t press your luck!
3. You committed insurance fraud or misrepresented yourself
Like we said above, filing a fraudulent claim or lying about yourself on your application (e.g. by claiming that your home is safer than it is) carries serious consequences.
If you’re lucky, your insurer will just raise your premiums, but they might also refuse to insure you in the future. Lying to your insurer is never worth the consequences, so don’t do it!