What are premiums and expiration dates?

Every insurance policy has a premium. So, obviously, an auto insurance policy has one too. A premium is the amount of money that you pay for an insurance policy and it is frequently stated as annual premium. Your auto insurance premium rate is determined by the insurance company through several factors such as your credit history, the condition of your car, you pay the premiums gradually and periodically for a period of, usually, several years. Every policy has an expiration date. This is the date when your insurance coverage stops. Often, a specific time of day is linked with this date. Let us say, for example, your insurance policy expires on January 3, 2013, at 12:00 a.m. Therefore, come January 3, 2013, at 12:01 in the morning, you are no longer covered by the insurance policy.

Why should you renew your auto insurance policy on time?

One thing is certain. You do not want your auto insurance policy to expire. Why? Because four problems arise when you let this happen.

1. If your insurance policy is expired and you encounter an accident, then the insurance company will not cover for the damages.
2. If your policy expires and is not renewed on time, you may experience a lot of inconvenience. Your insurance company may send its representatives to your place to check your vehicle before it grants you the renewal you request.
3. If you are under a “No Claim Bonus,” once your policy expires and no previous claims had been made previously, then the bonus that you are eligible to on the present policy will be forfeited. If your auto insurance policy is not renewed within ninety days of its expiration date, then your policy will then be calculated anew for the purpose of bonus application. Do not take for granted the “No Claim Bonus” offer. A certain amount of discount will be given to you upon renewal of your premium as long as you have not made any payable claim in the previous year. This can definitely give you additional savings.
4. The insurance company can deny your reinstatement of your auto insurance policy once you let it expire. If you had a hard time getting insurance in the past, then a denied insurance policy application might lessen your chance of getting one from another insurance company in the future. However, many insurance companies allow their policyholders to renew their accounts, but the insurance company may charge higher rates.

So, do not be neglectful. It pays to renew on time. Better yet, it is good to renew before the expiry date to avoid unnecessary fees and inconveniences.