Hurray it’s 2018! January is the first of many terrific months to come. The first of the year, last of the year and every month in between we are asked “Why did my auto insurance premium increase?”. In 1963 an average new home cost $19,300.00, a gallon of milk cost $0.40 and a gallon of gasoline was only $0.30. In 1995 an average new home cost $158,700, a gallon of gas cost $1.15, and a gallon of milk cost $2.96 This year, like years past, things will cost more.
Well believe it or not, car insurance rates aren’t just made up by auto insurance providers and they are certainly not made up by insurance agents; they are well thought-out calculations. An individual’s personal information and an insurance companies claims data is used by car insurance companies Actuarial Analysts. These professionals use specific data to fit into their algorithms to make an educated guess on how likely you are to file a claim – or, to put it another way, how much you could cost the insurer. The riskier you appear, the more you will pay for car insurance. The safer you seem, the less you’ll pay.
Some risk factors may not be obvious, like your credit history for instance, but insurance companies have statistical data to back up the reasons they use these rating factors. Other factors used by various insurance companies include any, all or a variety of the following:
• Geographical location
• Marital status
• Years of driving experience
• Driving record
• Claim history
• Credit history
• Previous insurance coverage
• Vehicle type
• Vehicle use
• Miles driven annually
• Coverages and deductibles
• Licensed Drivers
Insurance premiums start out with a base rate based on broad categories of drivers, such as females under the age of 25 living in Indianapolis, Indiana. Then, insurance companies look further at individual risk/rating factors that affect the probability of you placing a claim.
Ok so now your question may not be “Why did my rates go up?” but instead “Hey what are you, my Agent, going to do to lower my premiums. Obviously, I can’t change your rating factors, but I can offer options that may help lower cost. The first and easiest is to make sure you pay your premiums on time to eliminate Late Fees. Next consider the Paid in Full discount or paying by Electronic Funds Transfer or EFT. After that we can discuss increasing your deductible on Collision and of course as a Professional Independent Insurance Agency we can also shop your policy with a number of other insurance companies from within our own office. While there are options to help control costs the reality of it all is the inflationary costs will affect insurance premiums from time to time.
As technology and the world around us transforms, we too will try to adapt to the newest and greatest while maintaining the core values our agency was built on – service, honesty, and our commitment to provide accurate professional insurance advice to our insureds. Next month we’ll share some of the new ways we are conducting business.