Paying the Price
It starts with a funny noise – a rattle, a pop, that awful ear-piercing screech. Whatever it is you know one thing for sure – it’s time for help. You take your car in for a checkup when something doesn’t sound right or when it’s time for routine maintenance , so why not treat your insurance the same?
If we look back over the last 10 years so many things have changed – phones, computers, cars – the same can be said for the insurance industry, yet you may not pay attention to these changes until a bill shows up in the mail and you notice your insurance rates have gone up.
When determining a premium and whether the carrier will want to assume the risk, much is taken into consideration including accidents, new drivers, claims on a homeowner’s policy and even your credit score.
Quote vs. Premium
It’s important to understand that an insurance quote and premium are not the same. A quote is an estimate of premium for the kind of coverage you request based on the initial information you provide. A quote is NOT a guarantee of what you might end up actually paying for your premium once a carrier reviews and evaluates your record — including age, health, experience, and any prior tickets or claims you may have filed or were filed against you.
The price you are quoted versus the actual price of your premium also depends on how your quote was calculated. And as is the case with coverage, every insurance provider calculates these numbers slightly different. Ultimately it comes down to the individual insurance carriers, their state filings, and the underwriting departments to determine your final premium payment.
A Method to the Madness
Our team gets asked the question a lot – how did you come up with that number? The answer - WE didn’t but we understand why many ask this; we’re clients too and we know firsthand insurance can be confusing.
You see your premium go up and you want to know why – you didn’t have an accident or a claim – so how can your rate just increase?
The quick answer is that figuring out insurance premiums isn’t easy. Insurance companies hire and develop people who specialize in this exact area, known as actuaries. It’s their job to analyze and evaluate information for each client – age, driving record, claims history and a lot more. An actuary then predicts how likely an insurance applicant is to make a claim on their policy. The higher the chance usually the higher the premium.
It should come as no surprise that teens and young drivers are likely to pay more in premium than say their parent. They don’t have the experience, driving record or credit history their parents do so as far as an insurance carrier is concerned they are more of a risk to insure than mom or dad.
It Pays to Review
As the market and company underwriting requirements change, it’s a good idea to review and evaluate insurance policies to make sure you have what you need in place in the event something happens in the future.
So keep in mind it’s a good practice to have your insurance reviewed as your needs change. One of the benefits of working with an independent agency is the agency’s ability to evaluate multiple carriers at the same time, under the same roof. Imagine how much easier it would be to visit just one auto shop location with multiple auto mechanics from different companies and getting multiple quotes at the same time. Now take that concept and put it to use when it comes to your insurance. It doesn’t get much easier than that!
