Why does my insurance rate go up?
Premium increase can be frustrating! Especially when you've not had any tickets or accidents in years. Rates should reflect your personal habits and history. At least that's what one would think. The reality is, the majority of the rate is determined by situations out of our direct control. Here's how it works, and what you do have control over. We'll make it short.
Discounts: Discounts are available to customize your rate. For example: zero recent claims, good student, longevity, multi policy bundle, and others. These can lower your rate by about a 20% to 30% generally. Auto Accidents or Traffic Tickets can increase rates significantly.
Surcharge: This is the opposite of discounts as surcharges move the rate upward. For example: claims, tickets, accidents and other items. Increasing rates around 20% to 30%.
Premium Factor: The driving force behind rate is premium factor. Despite discounts or surcharges, "Premium Factor" trumps all and is the bulk of your rate. What is it? Simply put, it's cash "in" vs. cash "out." If a company is paying out more than it's bringing in adjustments must be made. Current issues in the industry would include, but not limited to: Increased cost of items insured, economy, population growth, unexpected disaster etc..
What Can You Do About It (Control)
Rates will always fluctuate. Chasing the lowest rates each year can be a hassle and also cost you much more money in the long run! I have had clients who will move away from Bear River to chase a slightly lower premium, then have their new company jump the rate upon renewal the following year much higher. Then if they get a ticket or have a claim in the meantime, they won't be able to return to a preferred company like Bear River. In the long run their insurance costs are greatly increased. The most cost effective approach is riding out the wave long term. Get to know your insurance companies history, premiums and underwriting. Use an agent that reviews your policies several times a year to make sure you are matched up with the best coverages and rates.
There are three types of companies in the industry. You want to "ride out the wave" with the most preferred and historically stable ones. Don't be tricked by catching a low premium with an otherwise historically high premium company. The Today show also had an interesting clip on rate CLICK HERE.
Please let us know how we can help! Thank you- The Insurance Pros Team