Have you ever thought to yourself or said aloud: “Why does my insurance keep going up?”. If so, you are like millions of others who have wondered the same. Every year, Car, Home, Workers Comp, Health, Umbrella, General Liability, and almost every other type of insurance increases in cost. What’s worse? You have done nothing to cause this. What can you do about it?
Annual rate increases are something we’re very used to. In fact, we have been talking to our clients about this situation for years. Insurance carriers prefer we agents not pay so much attention to the price. Apologies to the insurance company, but you and our clients pay plenty of attention, so your problem is our problem.
My policy’s price started low and has since increased. What happened?
Historically, one’s new insurance policy begins at a lower price than the old one. It’s exciting because you pay less and probably give nothing up, and sometimes the coverage improves. Then, the first renewal comes in, and the price is not what it had been. Were you duped? No, but you probably weren’t given an honest explanation about how insurance renewals work. Even though you’ve made no change to your policy, it will still go up. There is one reason why that happens.
Insurance companies want more money.
Of course, insurance companies want to make more money, and they are, in fact, companies. Their preference would be to make more by losing less. Remember, insurance is a two-way street, you write them a check, and when needed, they write you one. When the company can write fewer checks (aka pay fewer claims), they make more money. Only it doesn’t usually work out that way.
Since the company loses money by paying claims, there is typically one way to make up for it. You guessed it, by raising the premiums on everyone across the board. Does that mean everyone that company insures will pay more? No, not everyone. The price increases are higher in areas where the insurance company paid more claims. Suppose there were an above-average amount of claims in Baldwinsville compared to Cortland. In that case, B’villians would be in for a rate hike.
A rate decrease is rare because insurance carriers lose money in almost every region. That’s why your renewal policy doesn’t ever seem to go down.
Can I negotiate a new price?
If only the insurance company were more like your cable or internet provider. Unfortunately, it isn’t, and calling them to haggle on your price won’t get you anywhere. Occasionally, and only if you’ve had the policy for five or more years, would you have a chance at a re-rate. A re-rate means they’ll rate your policy as if you were a new customer. If the rate is lower, you could elect to take it. Be careful; a new price could come at the expense of essential insurance coverage you’ve been grandfathered into.
Many things could prevent you from getting the newest and best rate from the same company. Your chances will be reduced if you’ve had to make any claims to the policy. In our experience, that’s the first place insurance companies look. Another factor is the insurance type, as not all can be re-rated. Your car and home insurance could be considered, but most business insurance policies won’t be. Once you’ve exhausted the options at your existing company, it might be time to take the next step.
When should I change to a new company?
After that first price hike, it can be tempting to jump immediately to a new carrier. Still, you’ll want to avoid the temptation. Frequently changing insurance carriers can hurt your rates, especially on auto insurance. Insurance carriers award longevity to shoppers and can be tougher on those who switch often.
A good rule of thumb is to wait between 3 to 5 years before making a change. Of course, if you have a poor experience with your insurer before then, don’t stick around. Whatever difference in cost probably isn’t worth the frustration of waiting it out. A good relationship with your insurance agency should help provide appropriate insight into when the time is right.
Can we take it from here?
Because we are an independent insurance agency, we are not bound to one insurance company. You can end the calling around to give the same information about yourself or your business repeatedly. We get to know you, and over time we can look at other options without asking about every little detail. Instead, you can build a trusting and confident relationship with us without starting a new one every time you change insurers.
Please give us a call at 315-635-2095 or email us at YES@HoranSolution.com.
Read more: What really determines my insurance price?