Auto-renew is a great facility for people who have busy lives or tendency to forget things, on the face of it. Actually, it serves automobile insurance companies a lot better. Who could complain about a customer who has already arranged to pay for the next shipments? They would love to have most of their policyholders on it if they can.
How Can Automatic Renewal of Car Insurance Raise Concerns?
The logic behind is pretty simple that can be over-simplified. Think about setting up a weekly grocery order and payment plan with your local supermarket. Unless you call them up and tell them that you don’t want any more deliveries they will keep bringing you the same grocery items on the list and charging the total amount calculated based on prices at the time of delivery.
I am sure you can see the problems with this arrangement with grocery shopping. Yet, you may struggle to see the problems with your vehicle insurance renewal arrangements. That is exactly the problem because you get too comfortable with easiness of the setting that you don’t bother to check.
Also, it is not an item like milk, bread and apples that you can touch and see if it is good enough for you. You will only understand if it is sufficient and efficient when you have a claim. That makes it hard to measure and therefore okay either ways.
However, many people would want to go to the supermarket themselves to see different products, if there is special offers like buy one get one free. Also, they can easily tell that their requirements and tastes are changing every day. Now they like a softer cheese, semi-skimmed milk instead of full-fat. In time, they change the grocery store as well. Now instead of going to butcher, baker and fishmonger they only go to one large store.
The same changes in circumstances and requirements happen on auto insurance, albeit in a slower fashion. Having a payment in place must not be an excuse to ignore them. It must only be used as a backup plan not to miss the payments and be without the essential and legally required coverage.
Motorists should check if they will need changes on their policies and if there are better deals offered by another firm beforehand and determine how they like to proceed in time. Letting these decisions slide is easier when the continuity is a given. People already think that shopping around for vehicle insurance is a boring and tedious task and they are reluctant with it. Adding the feeling that they don’t have to do anything about it to continue creates an easy way out.
Further Issues Policyholders May Face with Auto Renewals
It would not be pleasant to see that your carrier is stuffing a little onto your premium thinking that you are not looking. This is the type of complaints some people have. They see that rates are quietly increased. They mean to do something about it but they let it sit too long and another chance is gone. When they finally find a better deal and like to switch they are told that they must pay cancellation fees.
This is not really the fault of neither the carrier nor the customer. It is the fact that psychologically it makes it non-urgent issue to deal with in time. Auto insurers cannot really be blamed since they have sent the terms in time for the customer to check and act on it. It is unless, some companies know this psychology and knowingly stuff a little bit more on the premium in the expectation that nothing will be done about it.
Can an Auto Renewing Policyholder Be Treated Favorably or Unfavorably?
You would think that a policyholder who has already offered to pay for the next term as well should be treated favorably. At least, you wouldn’t think that a new customer would be able to get a better deal, a much better deal. After all, we are thought to believe loyalty pays. Is this the case in the market? Unfortunately, there are surveys and reports to the contrary.
It goes like this; a policyholder with renewal arrangement in place decides to shop around for car insurance to see what other companies can offer. He/She completes several proposal forms with the same details as before and gets quotes. He/she manages to find exactly the same coverage at $300 discounted price. What is shocking is that this exactly the same package offered for $300 less is from his current provider.
This case of new customers managing to get a lot better premiums than existing ones is common. In fact, nobody denies it.. They openly admit that they can offer discounts to new customers to make their policies more attractive and persuade them to switch. This could outweigh the loyalty discounts they may be offering to their existing customers.
You may be using this facility the right way and making sure that you make adjustments to your automobile insurance policy as and when needed. Also, shopping around to find the best deals and switching if it serves you better. Then it is great and you have the best of both worlds.
However, there are many unassuming people who take auto renewal as easy way out and get into the routine of it. You may let it slip one or two terms if you have shopped around thoroughly the last time you checked. However, you may stand to lose discounts of as much as twenty percent if it becomes a habit to let it slip at every six-month interval. Furthermore, you may neglect to have a good look at the coverage and make changes as well.