Content of the material
- Get customized coverage for your business
- What If I Don’t Renew?
- Why are auto insurance rates increasing?
- Supply chain disruptions
- Labor shortages
- Changing driving habits
- Is it possible to avoid increased insurance costs?
- Bottom line: Progressive is good for high-risk drivers
- When Can You Cancel Progressive Auto Insurance?
- Use A Local Auto Insurance Broker
- My car policy expired. Can I renew it?
- Most Insurance Companies Send Renewal Notices 30 Days in Advance
- Related Links
- Similar Entries
Get customized coverage for your business
With over 50 years of experience and more than 30 types of business liability and vehicle insurance coverages, we can help you customize your commercial insurance quotes with exactly what you need, when you need it.
What If I Don’t Renew?
In many cases, your insurance premiums will go up when renewing a policy. If you decide the change is unwarranted or unacceptable, you will want to consider a new policy under a different insurance company. If you can find the same coverage for a lower price, it’s time to change providers. In this case, you won’t renew your current plan.
According to Esurance, if you decide to move on from your current policy, you’ll have to do two things:
- Contact your insurance provider and let them know you won’t be renewing your policy.
- Purchase a new policy before your current plan expires.
Deciding to let your car insurance expire is the same as canceling your policy. Each insurance provider differs in this situation. Some providers allow you to cancel over the phone or online, and others will need a letter of intent to cancel.
Whichever route you take to cancel, mark your policy’s end date on your calendar. If your insurance provider declines to renew your current policy or you decide to change companies, you’ll have to purchase a new plan before your current policy expires.
The cancellation date of your current plan and the start date of your new policy should occur on the same day. Auto insurance policies start and end at midnight on the date listed. You want to be sure you don’t end up with a gap in coverage.
Why are auto insurance rates increasing?
Car insurance rates are calculated based on a number of underlying factors. Individually, your age (in all states except Hawaii and Massachusetts), gender (in most states), driving history, vehicle type and coverage choices impact your premium. Additionally, broader factors also impact rates, such as if states pass revised insurance laws, the likelihood of claims occurring in certain areas or if vehicle repair costs increase.
Perhaps the biggest driver of higher 2022 car insurance premiums is inflation. Between December 2020 and December 2021, the Consumer Price Index (CPI) rose 7.0%. This means that, on average, we are spending 7.0% more than we were a year ago for the same goods and services.
Inflation pounded the new and used vehicle markets in 2021. The price for new cars and trucks rose by 11.8% between December 2020 and December 2021, while the used car and truck market saw a staggering 37.3% increase. Vehicles are also much more complex than they used to be, which adds to the overall cost of ownership. Even small accidents can cause hundreds or thousands of dollars worth of damage to delicate electronics that require specialized repairs.
Vehicle costs aren’t the only thing struck by inflation. The cost of healthcare is also on the rise. The Centers for Medicare & Medicaid Services reports that healthcare spending increased 9.7% in 2020, the most recent year with available data. This means that when someone is injured in a car accident, the resulting medical costs are greater than what they were in previous years.
Because car insurance is designed to pay for the costs after an accident — including both property damage and medical costs — anything that raises these costs is likely to raise rates. Insurers need to make sure they have enough funds to pay claims, so when inflation hits, car insurance rates are affected.
Supply chain disruptions
The last few years have created a perfect storm to disrupt supply chains. COVID-19 shutdowns caused decreasing demand in certain industries in 2020. With fewer people on the road and cars generally getting less use, there was a decrease in the need for vehicle parts. Then, an ice storm in February 2021 knocked out plants and factories across the South, the Suez Canal was blocked for six days in March 2021 and people began to return to a more normal level of driving, which caused increased demand but decreased supply. The auto industry has been one of the hardest-hit sectors. “Parts are more expensive, labor is more expensive and repair costs overall are more expensive,” Ellis says.
Perhaps the most evident of these vehicle-related supply chain disruptions was the difficulty in obtaining semiconductors. Semiconductors, often called “chips,” are used in a wide array of vehicle applications, including driver assistance systems, entertainment systems and electronic mechanisms. In December 2021, over 50 business leaders — including executives from American Honda Company, Ford Motor Company, General Motors and Toyota Motor North America — sent a letter to Congress urging the governing bodies to encourage the U.S. to create its own semiconductor research, design and production methods, to increase the supply of semiconductors and available jobs.
Along with supply chain issues making parts harder to find, labor shortages have made skilled workers harder to find as well. The Bureau of Labor Statistics reports that unemployment is at 3.9% as of December 2021 — sharply down from the April 2020 peak of 14.7%, but not yet back to pre-pandemic levels of 3.5%. The “Great Resignation” has also pushed workers to reconsider their career paths, with many labor shortages caused not by unemployment but by workers switching jobs.
Fewer workers can contribute to rising insurance costs. When fewer people do any given job, including vehicle repair and healthcare jobs, pay rates often increase as an incentive. For example, perhaps a mechanic used to repair bumpers for $100. Now, that same mechanic is working longer days and taking less time off to make up for a reduced workforce. To compensate, the mechanic now charges $300 to cover the same repair. Because the repair costs more, insurance companies may increase rates to prepare for higher claims expenses.
Changing driving habits
As we hunkered down at the start of the COVID-19 pandemic in early 2020, the country saw an unprecedented reduction in driving levels. Many households stopped commuting to work, school and activities. Streets were quieter and accidents were fewer. As a result, many insurance companies refunded some premiums to policyholders.
However, Friedlander points out that
“In 2021, we saw a return to pre-pandemic driving patterns which led to a significant increase in auto insurance claims and accident severity. In fact, the National Highway Traffic Safety Administration reported an 18.4% increase in fatal crashes during the first six months of 2021 compared to the first six months of 2020 — the highest percentage increase on record.”
This pendulum swing of driving habits may mean insurance carriers need to rebuild their claim reserves — the money set aside and earmarked for paying losses — which could mean higher premiums.
Is it possible to avoid increased insurance costs?
Bracing for a rate increase may seem stressful, but having the knowledge that your auto premium could go up can help you prepare and act quickly.
- Review your current policy: The first step in prepping for a premium change is understanding your current insurance policy. Reviewing your policy and knowing your coverage types, limits, discounts and premium can help you learn about your policy. If you aren’t sure how to analyze your policy, you might want to talk to an agent. Be on the lookout for your policy’s effective dates and see if your next renewal is available. If so, check the premium on that policy to see how your rate will be affected in 2022.
- Shop for a new carrier: Friedlander says that “comparison shopping is essential to obtain the best cost for the amount of coverage that fits your needs.” If you get your policy renewal and see that your premium has increased, you may want to first contact your car insurance company to see if you might be able to adjust your policy or add extra discounts to lower rates. For example, if you’re still driving less in 2022 than you were in previous years, could you earn an annual mileage discount? If you can’t offset your premium increase, you might want to shop around. While most car insurance companies sell the same types of coverage, each company also has its own underwriting rules, discounts, rating algorithm and policy features. Getting quotes from a few carriers might help you find a lower rate and a policy that fits your needs. You may even earn an early shopper discount if you switch in advance of your next renewal.
- Take advantage of discounts: Discounts can be one of the easiest ways to lower your premium. Reviewing your current discounts might help you identify areas where you could save. If you’re shopping for new coverage, you could look for a company that has several discounts that might be available to you.
- Check your other policies: Don’t forget about any other insurance policies you might have. Bundling your major policies, such as home and auto, with one carrier could potentially help you save money on both. Even if you can’t offset your auto insurance increase, you may be able to find savings on your homeowners insurance or renters insurance policy. Reviewing your entire insurance portfolio is a good way to make sure you are properly insured but not overpaying for coverage.
Bottom line: Progressive is good for high-risk drivers
We rate Progressive 9.0 out of 10.0 and recognize it as a smart choice for high-risk drivers in 2022. The insurer has a wide selection of auto insurance policies and add-on coverage, although Progressive insurance reviews from customers are mixed.
When Can You Cancel Progressive Auto Insurance?
There should be no delay in the cancellation of your Progressive car insurance. As soon as Progressive receives your request to cancel your policy, they should be able to cancel the policy immediately. The only reason that would delay the cancellation of your Progressive auto insurance would be if you do not include all the required information. Be sure to reference the list above of what they need to cancel your policy.
Use A Local Auto Insurance Broker
If you’re using an insurance broker for your auto policy with Progressive, then you won’t have to worry about how to cancel your Progressive auto policy. You can simply let your broker know that you’d like another auto insurance company. They can take care of finding you a new policy and cancelling your Progressive insurance. Stop doing all the work yourself and use a broker!
My car policy expired. Can I renew it?
If you failed to renew your policy before it expired, you may still be able to renew it based on how long you’ve been uninsured (though, depending on your insurer, there may be a lapse in coverage between the date your policy failed to renew and the date it was reinstated). Even if you can’t renew your old policy, you can usually purchase a new policy without delay.
Most Insurance Companies Send Renewal Notices 30 Days in Advance
Whether your policy is being renewed or not, you should receive a notice 30 days in advance of your date of expiry.
Most insurance companies send a notice 30 days before your policy is automatically renewed.
Most insurance companies also send you a notice 30 days before your policy expires.
Ultimately, most car insurance policies are automatically renewed, with the renewal occurring every 6 to 12 months. It’s in your car insurance company’s best interest to set up automatic renewals: if your car insurance policy is set to expire, then you may take the opportunity to compare prices with other car insurance companies.
However, if you’re in doubt about the renewal status of your policy with Progressive, then we recommend contacting your car insurance company to verify that your car insurance will be automatically renewed. It’s never good to let your car insurance lapse. However, most car insurance companies send you a 30-day notice before your policy is set to expire or be automatically renewed.
What if I’m Late With My Auto Insurance Payment? Does paying auto insurance build credit? What should you do if you can’t afford your auto insurance bill? [Update + Advice] What Happens If You Can’t Afford Your Deductible?