I think it is fair to say that steadily increasing premiums, over the last few years, have been pretty frustrating. In helping you understand the reasons why we're seeing these increases, it may provide a little insight and help to calm some of those exasperations.
I would say that one of the biggest reasons insurance rates are continually increasing is rising costs. Insurance companies face many expenses including labor costs, overhead expenses, the cost of reinsurance, and other expenses. If these costs increase, there may be rate increases to help cover those costs, just as prices go up when purchasing gas, mayonnaise, or anything else that we've seen huge spikes in, monetarily speaking. Other fluctuations could involve the cost of claims, catastrophic events, regulatory changes, investments, and underwriting performance.
Inflation affects the overall costs of living, the cost of goods and services as mentioned above, and the cost of repairs which affects the costs in repairing or replacing vehicles and homes.
Cataclysmic events such as natural disasters, hurricanes, floods, and wildfires can be significant when it comes to loss payouts. You may have higher rates if you reside in an area with a higher chance of one of these things occurring. Events such as mentioned can be catastrophic losses to insurance carriers and often are.
There are several, behind-the-scenes, reasons why you might be seeing increases in your rates. Regulatory changes such as government regulations and/or legal requirements both have an impact on costs and risk exposure. Additionally, compliance sometimes create new regulations which can necessitate changes in pricing structures and leading to increases in rates. Insurance carriers also invest the premiums to help generate income but when the economy or market takes a downturn, rates may need to be raised to maintain profitability and remain solvent. Underwriting is another cost that insurance companies face as their underwriting teams must continually assess performance for a balance between claims being paid and monies they collect and if it's not up to par, rates can increase to improve that balance.
Over the last few years, some insurance companies have lost billions of dollars, and some have paid .13 more cents to the claims than the $1.00 in premiums. Some were totaling $75,000 vehicles because they were unable to get the $6,000 part that was needed to fix the vehicles after a claim. Insurance claim lawsuits have skyrocketed and insurance companies have had to pay out huge sums of money to settle judgements for claims. We are seeing 'never seen before' things in the insurance industry right now and companies are doing everything they can to keep up with the massive losses that they are taking on.
I know it can be frustrating to see your payments increase when you are a good driver and don't have any accidents and sometimes that does happen. When overall costs are increasing exponentially, unfortunately we will see those numbers on our bills go up; however, there are rate increases and rate revisions. Rate revisions are sometimes used by the companies where the rate is revised according to the history of the insured. This means that your rate may go up, depending on your record, or your rate may go down if you have a good customer history.
When it comes to claims and rates, or no claims and rates, you will be rated accordingly. Some people say they should get lower rates if you don't have accidents and the truth is, you do. There are 2 ways that your policy can reflect these points. If you have a claim or violation, you can be surcharged which is something you will not see if you have a clear driving and claims history. The other way is via the use of discounts. Those discounts come in many different names such as the good driver discount, the accident free discount, the claims free discount, and others. If you have a claim, you can be surcharged for 3 years, that means it can increase each year for 3 years. Also, it will take an additional 2 years to get your discount back and when you gain a surcharge and lose a discount, the result can be a considerable increase in your payment amount. There are times when the department who handles these situations, can use their discretion and maybe not surcharge you if the accident was under a certain amount and there has not been anything else in your history but does not apply to all state or companies. There are also comprehensive claims to mention when it comes to this. Comprehensive claims, in general, are not surchargeable; however, if it is excessive or a repeating pattern for you then it can affect your premium. In the end, if you have nothing on your record and you are still seeing increases, you can bet the person with the claims or violations is seeing a much larger increase than you are. Please check with your state and insurance carrier, as these instances vary by state and company.
Some final tips to helping you get the best premium you can get is keeping up with your payments, maintaining a minimum liability of 100,000 per person in bodily injury and 300,000 in bodily injury per accident or more commonly seen as 100/300. Maintaining creditworthiness always plays a factor in how you are rated as well, and to end, always having your policies bundled for the best rates possible.
Please connect with me via any of our available platforms and allow me to take a look at what you are working with and come up with a new plan for you. I can educate you on the aspects of insurance and your policies that need it, then put a plan in place that will get you where you would like to be, need to be, and what works for you. Let me take away some of your woes and worries about insurance and provide you a little peace of mind!