People ask all the time why their Insurance rates change at their renewal. This is a understandable question. I was one of those irate customers calling my company upset about changes in rates before I sat through the state licensing course. Now most people understand the concepts that the rate may change because of: newly reported claims, moving into neighborhoods where more claims happen such as theft, vandalism, accidents, and violations. Few people can accept the fact that their insurance rate can be changed even though nothing has changed in their personal lives. The truth is your rate can increase, decrease, or stay the same according to the insurance companies info from a given area. Like most things in life this is most easily explained through analogy and this is one that I use with my customers.
Your rate can increase:
Let's say you have ten fisherman that have to catch a certain amount of fish. Five of the fisherman break their fishing rod. So the remaining five fisherman will have to produce a lot more fish if the company wants to still meet their quota of fish. Now if we switch this to car insurance we see that if a company incurs a high percentage of losses relative to the amount of customers in an area, it will cause the remaining customers to have to pay out more money in order for the company to break even.
Your rate can stay the same:
Continuing with our example of the fisherman, let's think about what will happen if the same ten fisherman were trying to meet their fish quota. Only three of the ten fisherman break their fishing poles. Even though there is a small amount of men not being productive, the fisherman are still able to meet their quota. This is similar to what will happen if an insurance company has a small amount of losses, and they are still able to meet their ideal profit or able to break even. At this point the company did lose money but not enough to where they need to offset it by increasing rates of other policyholders.
Your rate can also decrease:
This is the most favorable option of course. Let's imagine that the ten fishermen all keep their fishing rods intact. This will mean that the amount of fish needed to meet quota will be met with no trouble at all. Of course every now and then someone may damage their fishing rod but is able to easily fix it and keep fishing. No single fisherman will have to work any harder than the others because everyone catches a break, since no one lost the use of their fishing rods. So let's think car insurance. If ABC Insurance has little to no loss they will then be able to decide if and how much money off they will be able to reward their customers with.
How can you be sure that your insurance company is offering the best rate available?
Most companies send a renewal notice about thirty days in advance, so use this to your advantage and compare each renewal offer. Sit down with or call agents to discuss coverages, prices, claims satisfaction, etc. You can do this alone or you can utilize independent insurance agencies, like us here at Budget Insurance Agency. We usually work for several insurance carriers, (we use over 15) we'll get your info once and compare amongst all companies. This will save you time, and hopefully, money. Also do other things like join companies that reward good driving, and loyalty to the company. If you have any questions about renewals or any other insurance questions, feel free to email me or of course call 478-788-9188.