In the evolving landscape of American home and auto insurance, a notable trend is on the rise—an uptick in policy nonrenewals. The increasing number of policies not being renewed might initially sound daunting, but armed with the correct information and strategies, navigating these changes can be more straightforward than you think.
Goosehead is here to demystify nonrenewals, explain why they're happening, and offer clear, actionable advice for what you can do about it. Knowledge is power, and we're here to empower you.
Understanding Nonrenewals
An insurance policy is a contract between you, the insured, and the insurance company. Each of these contracts has a set term length that indicates the time period in which the agreement is valid. This term is typically a specific six- or 12-month range. Each time the term comes to an end, the insurance company has the choice to adjust the agreement, usually by way of a change in pricing, in order to be sure that the policy still makes financial sense for them. At this time, the insured can choose not to continue the relationship and seek coverage elsewhere. The insurance company can also choose to end the relationship by issuing a nonrenewal. This basically means that the insurance company is not offering an option to renew the policy and that the insured will need to find coverage elsewhere.
Why Nonrenewals Happen
Many people assume that every insurance company wants to keep every policy they can, so why would they issue a nonrenewal? The answer can be based on a number of factors. Sometimes, the decision is based on changes in a particular company's preferred client. They may have decided to remove policies in your zip code, county, or property value range. The decision could be based on unexpected weather or disaster patterns in your area over the past term.
Sometimes, nonrenewals result from individualized variables like an increase in claim frequency, changes in the insured property (like the roof on your home going from being 19 years old to 20 years old), or even inconsistent payment history. Either way, if your policy is not renewed, understand that the insurance company has its own reason for doing so.
Steering Clear of Nonrenewals
While broader market trends might be out of your control, there are steps you can take to lessen your chances of facing a nonrenewal, both from a market-wide and an individual perspective.
Enhance Your Home's Defenses
Invest in weatherproofing and security improvements. Not only do they protect your property, but they also make you a more attractive prospect to insurers. This can result in a lower likelihood of nonrenewal and the potential for some extra discounts!
Maintain a Solid Insurance Record
Think twice before filing small claims and ensure your premiums are paid on time. Before submitting a claim, it's always wise to get an estimate on the cost of repairing damages out of pocket without the help of your insurance. Depending on your deductible, it may make sense to save the claim and pay out of pocket. And, if you have your insurance with an independent insurance agent, you can always consult with them to make sure filing a claim makes sense for your policy.
Stay Informed
Keep abreast of how environmental changes and local regulations might impact your insurance needs. Knowledge enables you to take proactive steps to adjust your coverage as necessary.
Navigating a Nonrenewal
If you've received a nonrenewal notice, take a deep breath. There are clear steps forward:
- Understand the Reason: Whether it's a market trend or something more personal, knowing the "why" can help guide your next steps. Sometimes, the issue can be remedied by making updates or repairs to the property.
- Explore Your Options: Start looking for new insurance providers. Markets change, and there might be better matches for your current needs.
- Leverage State Resources and Independent Agents: Pay attention to the assistance programs your state offers and consider the tailored advice an independent agent, like Goosehead, can provide.
- Review and Adjust: Sometimes, addressing a nonrenewal is as simple as making a few tweaks to your policy or improving your risk profile.
At Goosehead, we understand that navigating nonrenewals can feel overwhelming. We take nonrenewals head-on and proactively shop the market as soon as we find out our clients are impacted. Whether you're facing broad challenges or individual hurdles, we're here to help you find the path forward with confidence. Because when you're well-informed and prepared, managing your insurance becomes a shared journey toward certainty and peace of mind.
