What is the significance of 'renewal' in insurance policies?

The process of renewal in insurance policies is crucial because it involves the continuation of coverage after the initial policy term concludes. During this phase, insurers typically reassess the risk associated with the insured party and may adjust the terms and conditions of the policy, including the premium amount. This reassessment allows for adjustments based on any changes that may have occurred since the last policy was issued, such as changes in the insured asset’s condition, the insured party's circumstances, or shifts in the market. This renewal process ensures that both the insurer and the insured are aligned on the coverage and terms for the upcoming policy period.