It’s Summer and it’s beautiful outside! Unfortunately, the temperatures are not the only thing that’s rising at the moment. Insurance premiums have been steadily climbing for years now. Every carrier has had increases recently, with no end in sight for consumers. There are many factors that affect the cost of your insurance.
Personal factors such as your age and driving record can influence pricing. For example, young drivers (under the age of 25) tend to have a higher claims frequency, so premiums are adjusted accordingly. Having many tickets and car accidents would also suggest that you’d be more likely to have a claim, and this can increase the cost of your policy. Your personal insurance score, which is mostly comprised of credit scores and length of time with your prior carrier, can cause significant swings in rate too. Additionally, broad factors, like the type of vehicle you drive or the area you live in, will also influence your insurance rate. It’s easy to understand that a sports car usually costs more to replace than a basic sedan. Moreover, if you’re driving that sports car in an area that has a lot of accidents, like Metro Atlanta for instance, the cost of your insurance can be very high.
Many clients have asked me, “Why did my insurance go up? I haven’t had any accidents. I’m a safe driver. Why do I have to pay more?” This is a completely reasonable question to ask. If you haven’t made any claims, why should the cost of your policy change? The answer lies in the basic concept of how insurance works in the first place. Insurance, at its core, is a way to protect yourself from a sudden loss by sharing risk among all the clients in your area of the world. If you’re fortunate enough to not have any recent accidents, consider yourself very lucky because claims frequency is almost constantly on the rise. Not only that, but the cost of these repairs has increased exponentially over the past few years. This can represent a major financial problem for you every single time you drive your vehicle. Imagine that you’re leaving a store, you go to change the radio station, and BAM! you’re involved in a car accident. Fortunately, everyone is ok, but the police come, and now you’re cited as “at-fault” for the incident. The next thing you know, you’re being swarmed with bills from doctors and auto-body shops. With inflation skyrocketing, it’s hard enough to pay for the groceries each week, let alone having to pay thousands of dollars for a fender-bender. Luckily, your insurance policy is designed to take this financial burden off your shoulders and make it easier to manage. That loss has now been spread to all of us, and insurance premiums took care of it. This is exactly why your rate may increase even though you haven’t had any accidents. Insurance is a way for us to help each other. If the costs associated with that help goes up, the premiums we pay must go up as well.
But is there a way to positively affect these increases? Contrary to popular belief, insurance agents don’t have much control over the cost of your policy. We can change coverages, raise deductibles, and look at discount options for you. Liability coverage has a large impact on the cost of your insurance. It is the most expensive coverage on your policy, so lowering limits can help to lower your costs. Collision coverage is usually the second most expensive on your policy. It allows the insurance company to pay for the damage your vehicle sustains in an accident, after you pay an initial deductible. Higher deductibles cost less, so you can raise your deductible to lower the cost of your policy. In both cases, changing your liability and deductibles can help, however, it’s not necessarily recommended because it can put you at an increased financial risk in the event of a severe accident. It is more efficient to inquire about the various discount options that companies have to help offset the cost of your policy. There are usage-based discounts that lower your premium based off how much you use your vehicle. You can take a defensive driving course which will also typically help. Lastly, many companies will even offer discounts for paying your bill on time or for being a loyal customer.
At the end of the day, insurance premiums change just like the cost of everything else in the world. If you have any questions about the costs of your policy, don’t hesitate to contact an insurance agent. Independent agents are great to utilize because we can help find which out which carrier would consider you to be their ideal client. Our job is to make a difference on your monthly bill, but also to help you get the most value out of your policy. We can assist in finding the discounts that you have available and can talk about the pros and cons of making coverage changes. Our job is to be your advocate and to be your best resource for information about your policy. We look forward to talking with you soon! Drive Safe!
Leonard Roberts – Providence Insurance Advisors
