Insurance Encyclopaedia

Premium renewal

A premium renewal is when your insurer adjusts your premium to make sure you pay the right price based on how likely you are to claim and what that claim will cost.

When are premium renewals usually done?

For most home and car insurance policies, premium renewals are done 12 months after you first bought your cover and then annually thereafter. This date is usually called your policy anniversary date. Heads-up, some insurers will also adjust your premium after you have had a claim, not just at your policy anniversary.

What things will impact my premium at renewal?

Your renewal premium reflects your insurer’s current view of how likely you are to claim and what that claim will cost. There are many different things that feed into this updated view. Here are some of the most common ones: • General inflation on retail products and services • Exchange rates, especially where imported parts will be needed to do repairs or replacements • Your claims history • Any changes in your personal profile like your age • Changes in things like the conditions of the roads or increased power interruptions leading to more power surges • Changes in crime rates in your area or the actual claims experience of the specific item you are insuring

If my car has depreciated in value, why would my premium increase?

It’s true that the payout you will receive if your car gets stolen or written off will reduce over time. The question is then: “Why would my insurance premium not go down at the same rate?” The biggest portion of insurer’s claims are actually repairs rather than replacements. So although the value of your car goes down, the value of the repairs and the cost of labour goes up over time – like all retail and service costs – and as a result you would most likely see your premium going up rather than down.