When you purchase an insurance policy, the insurance agent quotes you a rate that lasts for a predetermined amount of time. This rate and the specifics of your coverage will remain the same for this predetermined amount of time unless you specifically request a change. Once this time has passed, your policy will be up for renewal and your rate may be raised or lowered. At this time, you will also have the opportunity to alter your coverage or to cancel your policy altogether. To ensure that you make the best possible decisions about your coverage, it is important to review your policy carefully during your renewal period.
How To Renew Your Insurance Policy
Before you can conduct a thorough review of any of your insurance policies, you must understand how the policy works. Many different types of insurance policies exist, including home insurance, auto insurance, flood insurance, business insurance and more. Most people have two or more different types of insurance policies that must be reviewed periodically. Regardless of the type of policy you are reviewing, you will typically encounter several different policy components, including:
- Coverage limits – All insurance policies include coverage limits. These limits dictate the maximum amount of benefits you will be able to receive after a specific covered event occurs.
For example, if your home insurance policy provides a maximum of $400,000 of coverage for the rebuilding of your home, this is the maximum amount of benefits you will be able to receive to rebuild your home if it is destroyed in a covered event. In some cases, you may receive less than this maximum amount. However, you will not be able to qualify for more than the maximum amount of benefits your policy provides. For this reason, choosing the right coverage limit is very important.
- Deductible – An insurance policy’s deductible is the amount of money you must pay out of your own pocket after a covered event before your insurance provider will cover any of your expenses. The higher this amount is, the greater your financial burden will be if a covered event occurs. Keep in mind that some insurance policies have more than one deductible for different types of covered events, so you should review your policy carefully before you agree to the terms. For example, a home insurance policy may have one deductible for wind damage and a second deductible for other types of damage.
- Optional coverage – Regardless of the type of insurance policy you are purchasing, optional or extra coverage will be offered. For example, if you are purchasing insurance for your vehicle, you will be able to choose from several options ranging from the minimum required liability insurance to comprehensive coverage with rental car reimbursement and other extras. If you are purchasing home insurance, your insurer may offer extra coverage for sewer or septic system backups that are not available under a standard policy. The specific coverage options you choose will determine exactly which types of events will be covered under your policy.
- Premium – A policy’s premium is the amount you must pay for the insurance coverage you have purchased. Depending on the insurer’s requirements and your preferences, you may pay your insurance premium monthly, quarterly or annually. Premiums vary considerably based on the insurer you choose, as well as the type of policy you plan to purchase. In general, the higher your coverage limits, the higher your premium will be. Conversely, you can usually lower your insurance premiums by raising your deductibles and opting out of extra coverage offered by your insurer.
As you review your insurance coverage in advance of making a renewal decision, be sure to keep each of the factors above at the top of your mind throughout the process.
Questions to Ask About Your Policy
Before you make the decision to renew your current policy without any changes, ask yourself the following questions.
1. Is my insurance coverage still meeting my needs?
Your original insurance policy was drafted based on the needs you communicated to your agent at the time the policy was purchased. For example, when you purchase a home insurance policy, your insurance agent asks you a variety of questions about your home in order to determine the type of coverage you need. Examples of questions you may have been asked at this time include:
- Where is your home located? What is its assessed value?
- How much land do you have?
- Do you have any outbuildings?
- How big is your garage?
- What type of exterior does your home have?
- What type of roof does your home have? When was it last replaced or repaired?
- How many bedrooms and bathrooms do you have?
- What types of fixtures are in your bathrooms and kitchen?
- What type of flooring do you have?
- Do you have a fireplace?
- Do you have pets? If so, have your pets ever attacked anyone?
- Do you have a pool? If so, do you have a fence around it?
- How close is the nearest fire station? Is your home close to a fire hydrant?
- Is your home located in a flood zone?
Your insurance agent uses the answers to these questions to determine how much it will cost to rebuild your home if it is damaged, as well as your level of risk with regard to liability claims. Once the agent has these estimates, he or she can calculate the amount of coverage that is most appropriate for you, as well as the premium you will be required to pay.
This same principle can be applied to other types of insurance coverage as well. For example, if you have business insurance, you probably answered a variety of questions about your business so that your insurance agent could determine your coverage needs. Likewise, if you purchased car insurance, you answered questions about your vehicle, your history and your driving habits before the policy was drafted. If the answers to any of the questions you were asked when you purchased your policy have changed since you obtained it, your current coverage may not be appropriate. Explain the changes to your insurance agent and he or she will help you explore your options. Depending on the nature of the change, you may need more or less coverage than you had originally requested.
Keep in mind that, if you allow your policy to renew automatically, or if you renew the policy without asking for any changes, your coverage will typically remain the same even if your premium is increasing or decreasing.
2. Do I have any complaints about past customer service or claims?
If your policy period has been uneventful, you may not have had any reason to deal with your insurer’s customer service department or claims process. However, if you did file a claim or the insurer’s contact customer service department in the past, ask yourself whether you are satisfied with the results of the interaction. Was the claim handled efficiently and appropriately? Did you receive the service you needed in a timely fashion? If you have any issues with your past interactions with the insurer, it may be time to shop for other coverage. However, if you are happy with the service you have received from your current insurer, you may choose to continue the relationship.
Even if you have not had any interactions with your insurer’s customer service or claims process, you may still be able to evaluate the effectiveness of these departments. Consider researching the insurer online to learn about its reputation among other clients who have had issues with their policies or who have filed claims with the insurer. If you notice a trend of complaints or problems, consider looking for a new provider. However, if most clients seem to be happy with the service they have received, you can feel reassured that your provider is reliable.
3. Is there any way to lower my rate?
As a consumer, you may be able to lower your insurance rate in a few different ways. The most common strategies used to lower insurance rates include:
- Lower your coverage amount. – One way to lower your insurance premiums is to decrease the amount of coverage you have. The lower your coverage level, the lower your premiums will be. However, this strategy can also put you at risk of loss if you use it improperly. Don’t lower your insurance coverage amount unless you have reason to believe your previous coverage level was too high. For example, if you obtained a home insurance coverage while you had a pool but you have recently removed your pool, you may be able to lower your coverage amount.
- Raise your deductible. – Another way to reduce the amount you pay for coverage is to raise your deductible. The deductible is the amount you must pay out-of-pocket for covered expenses before your insurer will provide benefits. If you opt for a higher deductible, your insurance premium will be reduced to reflect your choice because the insurance company will be responsible for a smaller percentage of your expenses. However, be sure to choose a deductible that you will be able to pay if necessary. Otherwise, you may find that you cannot afford to repair or replaced a damaged asset if a covered event occurs.
- Change the type of coverage. – Depending on the type of insurance policy you are reviewing, you may or may not be able to change the type of coverage requested. For example, if you are reviewing a car insurance policy, you can decide to purchase a comprehensive policy, or you may decide to purchase a basic liability policy. The choice you make will determine how much you are required to pay for coverage. Keep in mind that some consumers may be required to maintain a minimum amount of insurance coverage. If you owe money on your car, for example, comprehensive coverage is likely required by your lender.
- Bundle your policies. – If you have not already done so, you may be able to save money on your insurance premiums by bundling your policies. Most insurers offer a discount to clients who purchase multiple policies at the same time. For example, you can typically save money by purchasing your home insurance and auto insurance from the same provider. Ask your insurer if such a discount is available and, if so, how it will affect your premium. Compare the bundled premium to the sum of the individual premiums you were already paying to determine whether bundling is worthwhile.
- Ask about discounts. – Most insurance providers offer a wide variety of discounts that can be used to lower your insurance bill. However, in some cases, you may qualify for discounts that your insurance agent has not yet applied to your premium. Examples of discounts that may be available to consumers purchasing car insurance policies include discounts for a good credit record, driver education courses, anti-theft devices, covering more than one car, driving a low number of miles annually, no accidents for a specific number of years, no tickets for a specific number of years and good grades (for drivers in school). Examples of discounts that may be available to consumers purchasing home insurance policies include discounts for having smoke detectors in specific locations, home security systems, not having any smokers in the home, installation of storm shutters or other protections and hail-resistant roofing.
Explore all of these options to find ways to lower your rate. However, make sure that you understand the implications of any decision you make. For example, if you raise your deductible and/or lower your coverage amount, you may be responsible for a larger portion of the associated expenses if a covered event occurs. Likewise, if you change the type of coverage you are purchasing in order to save money, certain events may no longer be covered under your revised policy.
4. Do other insurers offer better rates for the same coverage?
In some cases, you may be able to find a better rate for the same coverage through another insurer. Before you decide to renew your policy with your current insurer, consider shopping around for quotes from other providers. As you solicit quotes, make sure that the providers you contact are providing you a quote for the same coverage you currently possess. Even small differences in coverage can dramatically affect the quotes you receive, especially if these differences relate to the policy’s deductible or maximum coverage amount.
In some cases, the insurer who agrees to provide coverage for the lowest rate is not the best choice. As you compare rates, it is also important to consider the quality of service you will receive from the insurer you choose. Avoid insurers who have a reputation for poor customer service, a difficult claims process or any other issue that will interfere with your ability to obtain benefits if you need them.
Things to Consider Before You Renew
Once you have the answers to all of the questions above, you can make an informed decision with regard to your policy renewal. In many cases, however, you will have several different issues to consider before you can make your final choice. Before you ultimately decide whether or not to renew your policy, take a moment to consider:
Whether or not you decide to remain with your current insurer, coverage is an important consideration. Your review should have given you the information you need to determine whether you need or want to make any changes to your policy. Before you make these changes, be sure to consider all of the potential implications.
Based on what you have learned during your review, do you feel that the premium you will be charged after your renewal is fair? Were you able to find any other insurers who would provide the same coverage for a lower price?
3. Quality of service
When it comes to choosing the right insurer, the price is not the most important consideration. Although a lower price for equal coverage is desirable, the quality of the service you receive should take priority over price. Before you decide to renew your current policy or sign on with another provider, make sure that you will be receiving good quality customer service.
A Note About Coverage Gaps
Reviewing your policy carefully before you decide to renew is important, both to ensure that the policy is still meeting your needs and that the renewal price is fair and affordable. However, if you are planning to review your policy before you renew, beginning the review early is essential. If you wait too long to begin reviewing the policy and soliciting other quotes, you may not have enough time to make an informed decision before your policy expires.
In general, most insurance policy premium quotes last for 30 days or less, so reviewing the policy more than a month before its expiration may not be possible. However, you should begin the review as soon as you can. Even if you have not yet received the renewal notice and invoice from your current insurer, consider soliciting premium quotes from other insurers one month before your policy is set to expire. As soon as you receive your renewal notice and invoice, begin your in-depth comparison. If you have any questions or concerns about the renewal, contact your insurance agent as soon as possible so that you can get the information you need before the policy’s expiration.
Renewing your current policy or securing a new policy on or before your expiration date is essential. If you don’t secure a new policy or renew by this date, you will experience a gap in coverage. Not having the insurance coverage you need can be incredibly damaging, even if your coverage gap lasts for only a few days. For example, if you fail to renew your home insurance policy or secure a replacement policy by your current policy’s expiration date, your home will be without coverage until you secure a new policy. If an event that occurs during this time causes damage to your home or exposes you to liability, you won’t have an insurance policy to cover the associated expenses. Instead, you will be forced to pay these expenses on your own. Depending on the nature of the incident, you may experience significant financial distress. For this reason, reviewing your policy in a timely manner and making sure that you have no coverage gap is highly recommended.
About the Marine Agency Renewal Process
If you have one or more insurance policies through Marine Agency, you will receive notice from us when it is time to renew your policy. You will also receive your renewal binder bill, or renewal invoice, at this time. Review this document carefully to make sure that the specifics of the coverage and the required premium are satisfactory. If you are happy with the terms of the renewal, you can renew your policy online at https://marineagency.com/resources/renew/. Simply follow the prompts on the screen and your policy will be renewed. You can also renew your policy by contacting your Marine Agency insurance agent directly.
If you are not satisfied with the terms of your renewal, or if you would like to make changes, contact your Marine Agency insurance agent to discuss the issue. Your agent will be happy to discuss the policy with you and help you find coverage that meets your needs more effectively.
Getting Help with Your Review
If you don’t have significant experience reviewing your insurance policies prior to removal, or if you have several complex insurance policies to review, you may feel overwhelmed. At Marine Agency, our insurance agents understand how to renew an insurance policy, and we are here to help you make the right choices. Contact us today if you would like professional assistance as you review your policies. We will help you understand your current coverage, identify any weaknesses and make the necessary changes to ensure that all of your risks are covered adequately.
For more information about insurance renewal, or to request your free quote, contact our team here at Marine Agency Insurance today.