A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products, including home, life, auto, and commercial, and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, mainly in the insuranc...

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Reviewed by Leslie Kasperowicz
Farmers Insurance CSR 4 Years

UPDATED: Oct 14, 2021

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Important facts to know...

  • Most auto insurance terms last for either six months or one year
  • When the policy term is about to end the policy will either expire, renew, or non-renew depending on several factors
  • Most insurance companies will start the renewal process about 45 days before the expiration date on your policy
  • The insurer will reassess the each driver’s driving records and claims histories to decide on the next term’s premium
  • When you get renewal paperwork, review your rates closely and make a payment so the policy doesn’t expire

When you find the right auto insurance policy that offers you just enough protection at a price that you can afford, you sigh a breath of relief.

You’ve achieved both of your two primary goals and you don’t have to worry about buying a new policy in the foreseeable future. Unfortunately, the auto policy that you’re paying now, won’t last forever.

All auto insurance contracts are sold in terms. The term is the period of time that the carrier must extend coverage for you at the issued rate. After that period of time is up, the policy may be renewed and new rates will be calculated.

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If you have any tickets, accidents, or other relevant changes in the household, the insurer could inflate your rates. Here’s what you need to know about renewals and when they’re processed:

How long does an auto insurance term last?


Insurance policies have a start and an end. The start of the policy is called the effective date and the end is called the expiration date. In the standard industry, there are 6-month terms and 12-month terms. After that period is up, the policy term will either continue with the same policy number or the insurer will drop it.

While many carriers offer both options, some will only offer one or the other.

The type of term that you’re offered is dependent on the carrier you have insurance through, the state regulations concerned insurance terms, and which term you choose. In some states, officials require all companies to offer both 6-month and 12-month options.

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Where can you find your term information?

There are a few policy documents you can look on to find the effective date and expiration date of your insurance. If you’re on-the-go, look at the ID card that you should have sitting in your glove compartment. At the top of this, it shows your policy number, when it started, and when it ends.

Another document that is extremely useful when you need to find specific policy information is your declarations page.

The declarations page contains a lot more information than the ID card. At the top of the page, no matter what company you’re with, it will contain the policyholder’s name, the policy number, and the policy period.

Why do car insurance policies renew?

Policies have an end date because it wouldn’t benefit the insurer to sell coverage indefinitely. While they would collect premiums for longer, the premium that the insurer collects wouldn’t be sufficient because risk classes are always changing.

One way to constantly monitor risk and adjust pricing is to sell policies with guaranteed rates that only last a limited period of time.

At the end of each term, the insurer will review every driver’s record and the policy claims information to see if rates should be adjusted. If the company’s bases rates have changed or the policy falls into a new risk class, your updated premium for the new term could be completely different.

How is a policy assessed when it comes up for renewal?

When you initially sign up for a car insurance policy, the application that you complete and submit will be thoroughly reviewed.

Underwriters will look over all of the answers, run reports, and update the final rate if new information is discovered during the binding period. Your rates aren’t really official until the underwriter is done.

After the policy is issued, your rates won’t change unless you make changes to your insurance. When the policy renews, all of your information will be reviewed just like it was at inception. It’s as if the underwriter is assessing new business again to see if the policyholder qualifies for coverage for another term.

Some of the information reviewed at renewal includes:

  • Your claims record through the insurer (any at-fault claims on your record or several non-fault claims will lead to a rate increase)
  • Your credit-based insurance score (the underwriter till run your report once every other renewal to see if your score has changed)
  • Your C.L.U.E. report (will show if you’ve had third-party claims with another auto insurance company)
  • Your Motor Vehicle Report (will show if you’ve had recent convictions for moving violations that need to be surcharged)
  • Reports showing a new driver in the home that’s not listed
  • Changes that need to be made in driver assignments, discounts, annual mileage, and vehicle usage

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When do you find out if your renewal rates have changed?


You won’t officially know how much you’re going to pay for your next term of insurance until your paperwork is sent to you. Most companies don’t run the reports that need to be reviewed until about 30 to 45 days prior to your policy’s expiration date.

If the carrier needs to verify information, you may get letters and rejection forms in the mail before you receive your official renewal packet.

In most states, insurance companies have to physically mail renewal declarations pages and billing invoices in the mail rather than emailing them to your inbox.

Is the company allowed to deny you coverage?

You may not receive a renewal offer in the mail if the company decides to non-renew the policy. When a company drops you, you will receive a non-renewal notice in the mail telling you why. All notices must be sent at least 20 to 30 days before your policy ends and they must explain why you don’t qualify for coverage any longer.

You don’t have to renew your policy with your current carrier. You have the option to shop around for coverage and look for a better deal if you’re not satisfied with your new rate.

If you’ve been procrastinating and your renewal is quickly approaching, you can get rate quotes in a hurry by using an online rate comparing tool that gives instant quotes.

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