Whenever you take out home insurance, you should be given a choice about whether you want the policy to renew automatically or not in a year’s time. Every insurer should also give you a way to change these preferences at any time. But what is auto-renewal and should you choose it or not?
‘Auto-renewal’ means the insurer is assuming that you want to carry on with the insurance if they don’t hear from you otherwise. It doesn’t mean that you’re obliged to renew with them, or indeed that it can renew without your intervention sometimes.
Most standard home insurance policies last for one year, and to continue cover past that point you have to renew the policy for another year.
If auto-renewal is turned off, then you’ll have come off cover as soon as the renewal date passed. That means if you get in touch late to renew your policy, you might not be able to and would potentially have to take out a new policy, depending how late you are. In the worst cases, like where you’ve had a recent claim, you might not be accepted with your current insurer as a new customer, though you would have done as a renewing customer.
When it was turned on, the insurer would give you the benefit of the doubt past the renewal date to try and get in touch. Eventually you would run into the standard arrears process, but by not prematurely ending cover it removes the risk of a possible gap in cover leaving you with a problem.
You still can even with auto-renewal turned on. Insurers are obliged to send you the renewal terms for your policy in reasonable time ahead of the renewal date. That should give you enough time to check things over and decide if you want to go ahead or not. The only difference is that if you do want to go ahead, you can leave things as they are with auto-renewal turned on. If it’s off, then you’ll have to take action (either online or getting in touch) for cover to continue.
How you pay for your insurance and whether you auto-renew are not linked. However, some insurers may not be able to take a card payment automatically, which means that if you pay up front by card even if you auto-renew then you’ll still have to make a payment for the new year.
If you pay for insurance monthly by direct debit, then auto-renewal is the most convenient method as payments will continue coming out of your account with the new amount as listed in your renewal documents.
You should only turn auto-renewal off if you know you will have the time to deal with your insurance sufficiently in advance of the renewal date, whether you are shopping around or not.
The only specific reason that you would consider turning auto-renewal off is if you’re likely to shop around but forget to cancel your old policy. In this case, you could end up paying for multiple insurance policies unintentionally.
If you’re likely to forget to deal with your insurance in good time, and want the peace of mind that you’ll still be covered for a grace period if you do forget, then you should absolutely consider keeping it turned on. We would never want any of our customers to end up without cover just because they forgot to get in touch, which is why it’s available as an option for our policies.
Remember that ‘automatically renewing’ doesn’t mean that money will go out without your insurer telling you the new premium!
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