You check the bank account and, surprise! They have raised the price of your insurance without warning. It is time to ask for explanations and to ask yourself …
I am sure that if you have come this far it is because you have caught a good rebound with your insurance company. And the cause is that the price of insurance has gone up.
You bought the insurance a year ago at a good price and, at this time you have not had any incidents, so why change your insurance? You also think: the renovation company will notify me and tell me how much it will cost.
But suddenly you check the bank account or the credit card and… SURPRISE! insurance has raised an “egg”, and what is worse, without notifying you of the rise.
It is the moment in which the questions and calls to the insurance company begin asking for explanations. If you can talk to her, she will excuse herself saying that she has acted according to the contract you signed and that now you can no longer cancel the insurance, if it was your intention, because you are out of time.
Some readers have already expressed themselves in the pages of this blog in situations of helplessness and abuse of power of the insurer. I invite you to continue leaving your comments at the end of the article.
But all is not lost and since I don’t want you to have doubts about what your rights are, in this post I am going to tell you everything you need to know.
Can the insurance company raise the price of insurance without notifying me?
Yes. The answer is YES. In the same way that bread, fruit, telephone, or electricity go up, the price of insurance also goes up.
We are in a country of free competition – at least that is what they sell us – where it is the market that establishes what the products and services cost. Well, in the case of insurers, they must also comply with what the law establishes.
Article 25.3 of the revised text of the Law on the organization and supervision of private insurance, refers to premium rates, establishing, on the one hand, that they must be sufficient to satisfy all the obligations derived from the insurance contracts. And on the other, that they will do so in a regime of free competition in the insurance market.
According to this, the law only establishes, within the principle of the sufficiency of the premium, the minimum amount that the insurer must charge to respond to the commitments it has acquired.
An insurance contract is a commitment made by the insurer to pay compensation or provide a service in exchange for charging a premium.
Operating under a free competition regime means that insurance rates do not have to be authorized by the administration, nor sent to the DGSFP for review unless they are required in order to verify that they meet the technical requirements.
Ultimately, insurance companies can raise or lower the price of insurance, depending on the economic results.
However, this freedom of insurers to modify the premium must meet a series of requirements for what the price of the insurance implies within the contract itself.
What role does price play in the insurance contract?
The price of insurance plays a fundamental role in the contract. But I am not referring to the amount but to the relationship, it has within the insurance.
An insurance contract is a commitment made by the insurer to pay compensation or provide a service in exchange for charging a premium. This is established in article 1 of the Insurance Contract Law, therefore the price is an essential element of the insurance contract. Any modification that the contract undergoes, for this reason, implies a contractual modification that you must expressly accept.
But what is more, the acceptance by the parties of the modification of the insurance price must be formalized in writing, in the policy itself, or in a document attached to it.
So, should the insurer always communicate the renewal of the insurance to the policyholder?
Well NO, you shouldn’t always. There are certain cases that will modify the price of the insurance upon renewal, in which the company will not be obliged to inform the policyholder.
These assumptions are specified in two situations, when the renewal of the premium is provided for in the contract and when it is not. I tell you in detail.
The renewal of the premium is provided for in the insurance contract.
In this case, the insurer does not have to communicate the new insurance price in advance of the renewal.
I always recommend that you read the policy to know what we are signing and the terms in which we do it. These are some cases that usually appear in the contract for which the insurer will not inform you if the price of the insurance increases.
The accident rate
This is one of the reasons why insurance goes up more often. And it does not matter if it is a car or damage policy. Many insurers include in the policy the clauses that determine the increase in the price of the insurance according to the number of claims you have during the annuity or their amount.
Depending on the company, the price of the insurance can double and they could even cancel the contract.
When the increase experienced by your policy is due to the fact that you have had claims, the company would only be obliged to inform you if, in addition, it has modified the rate premium.
Promotions or commercial discounts
There are many insurers to attract customers to apply commercial discounts on their policies that last a certain period of time. These discounts do not modify the insurance premium, although its final price does.
In other cases, especially in health insurance, companies offer promotions in which you will not pay anything or only a part of the premium during the first 3 months. The following year, you will have to pay the 12 months at the agreed price and even increased by the IPC
If the Consumer Price Index (CPI) goes up, your insurance can too. The CPI is the increase in goods and services between two determined periods of time. The insurance benefits are based on the payment of compensation for the value of the goods or the provision of a service. Therefore, there are insurers that protect themselves from these increases by including in their contracts a clause to review the price of insurance according to the increase in the CPI.
Above all, it is the insurers that market health, death, or damage insurance that include these types of conditions.
Increase in rates and taxes on insurance
It is not frequent that it happens but sometimes it happens that the government of the day modifies the taxes or surcharges of the insurance contract. When this happens, the price of the insurance increases, but the insurance conditions do not change.
These are the most frequent reasons for insurers to include renewal conditions in their contracts and thus avoid the duty to inform in advance. The policyholder in this case does not have to accept the new conditions as they accepted them at the time of contracting the insurance.
The reasons that modify the price of the insurance are not foreseen in the renewal of the contract.
In this case, the policyholder must accept the new conditions as provided in article 5 of the Insurance Contract Law (LCS).
If the insurer intends to increase the premium and the contract does not contemplate it, then it is obliged to inform the policyholder two months before the renewal.
In the event that the insured does not accept the increase in the price of the insurance, the company may refuse to extend the contract, which may not be terminated until expiration.
It may also happen that the insurer fails to comply with the notification period or that it does so in such a way that the client does not have proof of the modification, in which case it must respect the premium of the previous annuity or it will accept the termination of the contract.
What can you do if the insurance price goes up?
Insurers are free to set the price of the insurance, which should be sufficient to allow them to meet the commitments assumed. But this freedom is subject to a series of rules that they must comply with.
If it happens to you that the company raises your insurance without notifying you, the first thing you have to do is review the conditions of the policy. With this, you can check if the increase corresponds to any of the renewal conditions. In that case, the fact that the company has not notified you in time does not allow you to cancel the contract without notification and after the deadline.
Some insurers camouflage in assumptions included in the contract other increases that have nothing to do with it and do not inform the insured. In that case, you will have to give your express consent to the new conditions.
When the company decides to raise the price of the insurance and informs you before two months of expiration, you will have a period of 15 days to communicate the acceptance or objections to the new conditions. If you do not ask for cancellation but you oppose the insurance company’s proposal, it may terminate the contract upon expiration.
Different is when you do not communicate the renewal or do it at the wrong time. In that case, you can claim that you respect the premium for the previous period or cancel the insurance. To solve your doubts about how to do it, I advise you to download this guide How to cancel insurance efficiently. In this article, you have other alternative solutions 3 Tricks to cancel the insurance and not claim the receipt.
Now it is your turn to leave your complaints or the answer to this question in the comments.
How have you acted when the price of your insurance was raised without warning?