Meaning of Insurance Renewal
Insurance policies are just for a short while and such, they don’t last forever, However, Most policies have a policy period of one year. During this period, the insurance provider won’t make changes to the policy’s premium or coverages (except in special circumstances).
When you start a new insurance policy, your premium is locked in for the length of the contract’s policy period. It’s usually one year, but some policies renew twice a year. Most non-life insurances are usually contracted for a period of one year. at the end of this period, the insurance lapses unless it is renewed before the expiry date.
The parties to the insurance contract may, however, mutually agree to renew the policy. Renewal is not automatic. The exception in this respect is life assurance contracts which are long-term in nature.
As a general rule, renewal is contemplated by the language of the policy and is provided for by special terms in the policy. Renewals are invited or negotiated as though they were a new contract.
The legal position about whether a renewal is a new contract or merely the continuance of an existing one has never been finally resolved. Although renewal must be negotiated, the enquiries are nowhere near as searching as with the original contract. Nevertheless, the role of utmost good faith revives at renewal and the insured is obliged to disclose any material alterations in the risk.
The insurance renewal happens at the end of the policy period. At renewal time, the insurer adjusts coverages and premiums before starting the next policy period. Premiums can either increase or decrease. The insurer can also choose not to renew the policy, though they’ll only do that in certain uncommon circumstances.
The timing of insurance renewal isn’t the same for everyone; it’s based on when the policy went into effect, so it can be any day of any month.
The insurance company will send their customers a notice of renewal about one month before each renewal happens. This notice tells the customer how their premiums will change after the renewal, and if there are any adjustments to their coverage.
Also, there are some contracts in fire insurance where the insured gives an undertaking to offer the risk for renewal, for a fixed minimum period, in return for a discount on his premium ( the insurer, however, is not obliged to accept the renewal)…
Apart from this type of long-term agreement, there is no legal obligation either to seek or invite renewal. The contract is for a certain period, usually a year, and neither the insured nor the insurer is obliged to continue the contract for a further period.
What do I need to do at renewal time?
When you receive your renewal notice, sometimes you don’t have to do anything at all. If you continue to pay your premiums, your insurer will renew your policy for another year.
If your insurer intends to increase your premium by 10 per cent or more upon renewal, the insurer must send you to notice of the rate increase at least 30 days before your renewal date.
Upon the annual renewal date, an insurance company will often try to encourage you to upgrade to a new policy.
An insurance renewal date is a date on which an insurance contract must be renewed.
However, renewal time is a good chance to review your policy to make sure that your coverage is adequate. Take a few steps to ensure you’re still getting the coverage you need:
- Review the details. Small mistakes can fly under the radar. Take a moment to review the details on your policy like your address or the names of insureds to make sure they’re all correct.
- Think about any big changes you’ve made since your last renewal. Did you do some renovations? Make a big-ticket purchase? Check that your limits of coverage are high enough for any additions you’ve made and ask your insurer to bump up your limits if they’re not. If the occupancy or use of your home has changed – like starting to rent the home to others – don’t wait for renewal time; let your insurer know immediately.
- Review your limits of coverage. Even if you didn’t make any significant changes during the year, it’s worth thinking about your limits of coverage. Are they too low? Are they too high? Is your deductible still appropriate? Renewal time is the best chance to make changes to your policy.
- Check your payment method. Make sure the method of payment that you gave your insurance company is still up to date, particularly if you pay annually. A valid payment method ensures that your renewal will go through smoothly.
Underwriting Consideration Arising from Renewal
Even if renewal is invited, there is no obligation to offer terms on exactly the same basis as for the previous year. Instead, many considerations may arise which will mean that the terms should be varied, either in favour of the insured or in favour of the insurer, as the case may be.
It is the underwriter’s duty to make a fresh apraisal of the contract at renewal, or preferably a short time before, to see whether any amendments of terms are necessary.
Life policies and permanent sickness personal accident policies are arranged on the basis that the insurer is not permitted to come off risk, or impose different terms at the policy anniversary date, even though the risk may have deteriorated substantially provided the policyholder continues to pay premiums and complies with any policy requirements, the renewal must go through on the terms originally arranged. This is an exception to the general rules and applies because the nature of the contract is long-term.
It would be quite inquitable for the position to be more otherwise, and naturally, the premiums are calculated to take this aspect into account. However, if the policyholder allows the policy to lapse due to non-payment of premium, new terms may be imposed if his state of health has deteriorated as fresh consideration will be given to his assurance upon request for its reinstatement.
How do I renew my insurance policy?
Renewing your insurance policy is very simple and easy, this is because it’s usually done immediately after the insurance renewal date lapses.
Why? Think of it this way: When you have a Netflix account, Netflix automatically ‘renews’ your subscription every month, until you decide to cancel. Insurance works in a similar way, but there are some differences:
1. Your insurance company must get you informed that they’re renewing your subscription (thanks to regulations)
2. Your price might change when your policy renews
What will i stand to gain if I don’t renew my insurance policy
Gnerally, if you don’t renew your insurance, your home, your life, property and staff will no longer be under insurance coverage. Plus, your insurance company will also let anyone listed as an interested party know that your policy was not renewed.
Once the renewal date of an existing insurance contract is riched, that is the date on which it must be renewed, the insurance company will send their customers a notice of renewal about one month before each renewal happens and failure to renew this contract when time lapses may result to ineffectiveness of the policy.
If you wish to look for a new insurance company, use the information on your renewal letter to compare offers and make a wise decision. However, If you’ve found anything you’d like to change, inform your insurer before the renewal date. They’ll update your policy and inform you of your new premium.