You’re a safe driver. In fact, you’ve never filed a claim under your homeowners or auto insurance policies … yet, your insurance rates keep increasing. There’s actually a few factors at play when it comes to insurance rates. Aside from inflation and other economic factors, have you ever wondered how claims impact your rate—and what you can do about it?
Insurance works because people pool their money together in an effort to transfer risk. Some people will never take out all the money they contribute over time while others will take out more than they could have contributed in their lifetime.
Let’s consider how that pool of money is spent. According to a recent study conducted by Insurance Journal, losses paid in 2016 outpaced the premiums collected by many insurers. Higher than anticipated losses in 2016 can mostly be attributed to consumers driving more miles, driving distracted more often, higher physical damage losses because of complex and sophisticated automobile parts, and higher bodily injury costs from severe accidents.
Claims—even if they aren’t yours—matter
When insurers pay out more money in claims than they budgeted for, they have to catch up. By sharing small increases across most of the customer base, the insurance companies’ “pool of money” is fortified for anticipated losses in the next year. When insurance companies have a year with high claims, you can typically expect a rate increase in the next year.
So what can you do about your own pocketbook?
Paying the premiums in a timely manner, paying for minor losses yourself instead of submitting them as a claim, and bundling multiple lines of business are behaviors insurance companies generally appreciate.
Every individual is a little bit different. There are many opportunities for discounts, and one person’s particular risk profile may be a better fit for one company over another. And that’s exactly why working with an independent agent is in your best interest.
An independent agent can access multiple top-rated insurance companies. Agents, located right in your community, better understand you, your unique insurance needs, and how that relates to insurance trends in the marketplace. They can help you find the right insurance policy which offers the greatest value for insurance dollars spent.
Also, if you find yourself with an insurance company with rates that have creeped up too much, your independent insurance agent can do the shopping for you to find the best policy for your current risk profile. If you haven’t already contacted an independent agent, now’s a great time to have them do an analysis of your risk profile and ensure you’re getting the best bang for your buck.