Why are my insurance premiums increasing?
A question as old as time. This is something that, as insurance agents, we get a lot, and it's not always a simple answer which is why we decided to write this post.
There are two main causes of why your premiums increase:
1. You've had a loss...
Insurance companies reserve the right to reevaluate how to rate your premium at every renewal. If you've had a loss, accident, or violation during your current policy period, you can expect your rates to increase at your renewal. When insurance companies see y
ou've had an incident, they will look at you as a higher risk driver which will have a negative effect on your premium. This can additionally affect you if you have a "claim-free" discount which you will lose unless you have Accident Forgiveness or an equivalent protection.
2. Company-wide rate increase...
This is the more complicated of the 2 major reasons for premium increases - and these are the ones that frustrate people the most. This is where a company will increase their premiums a certain percentage across most or all of their customers. We get all the time, "I haven't had any incidents, why is my premium going up?" There are several factors as to why a company will take a rate increase. One of the most common factors is inflation. Everything is becoming more expensive, that's just the way inflation works. Noticeably, healthcare and auto repairs which tie into why your auto premiums are going up. Another reason companies take rate increases is if they've paid out a lot of claims in previous years. If this is the case, they will increase their premiums to try and make up for previous deficits. This has been a common case with many major auto insurance companies here in Georgia.
How to prevent or at least be aware of rate increases...
Rate increases are going to happen no matter what. It's just the nature of inflation. That being said, you can do a few things to combat increases.
Be aware of your current discounts. There are certain discounts that are only offered to drivers with clean records so understand if you have an incident, you'll most likely lose them.
Review your policy. You will receive a copy of the renewal policy about a month prior to your renewal date. Review it on your own if there are any premium or coverage changes. If you have any questions, give us a call, and we'll be happy to go through a review with you. We're here to help!
Shop around. One of the benefits of being an independent agent is representing multiple carriers so we'd be happy to shop around for you. However, this should be your last option. There are additional discounts for being loyal to a certain carrier for long periods of time. Additionally, insurance companies quote higher premiums to customers who move their policies around every renewal.
Fenix Risk Management is an independent insurance agency proudly serving families & businesses in Georgia, Alabama, North Carolina, South Carolina, Tennessee, and Florida.
Vik is an adviser at Fenix Risk Management.
Note: the opinions expressed in this blog are that of the author, not of any other individual or organization referenced.