One of the biggest reasons people change insurance carriers is price. Most people know to expect a slight increase in premium following a claim, but many insureds experience a rate increase even after several years of maintaining a ticket and claim-free record. Read below to find out reasons why this can happen and what you can do to stay properly covered without breaking the bank.
First, don’t panic. Insurance rate increases occur to everyone, but you have options. Before making any decisions, look at the big picture and think long term. What have your rates done the past five years? Insurance companies leap frog one another, so consider this, if your current carrier just took an increase and you find insurance for less money elsewhere, you may be stepping in right as they are about to take a price increase themselves.
Review Your Policy with your Agent
The next step is to review your policy with your agent. A good rule of thumb is to go over your insurance once a year. Life moves quickly and most of the time, updating your policy is not the first thing on your mind. Look for opportunities of savings that may have been missed. Perhaps your situation has changed and your agent is unaware:
- Look for policy limits that can be reduced. Sometimes you have more coverage than you need, and ensuring you have a tailored policy matching your coverage needs may help reduce your premium.
- Ask about discounts such as multi-policy or going paperless. Also look at billing options such as paying every six months versus monthly. Some payment options cost less money than others providing opportunity for savings.
- You should not jump from company to company every time you can find a lower price; firstly you may be sacrificing coverage and quality for a few dollars, and second you may be hurting yourself in the long run by not having a long enough period of continuous coverage. However, when your premium is troublingly high, it might be a good idea to compare with both the price and coverage of another carrier.
Be aware that there are three reasons rate increases generally occur
- When an increase occurs to a specific policy, it is generally due to a claim on that policy, a change in the credit criteria, or changes to the policy itself.
- When an increase occurs to a specific company, it could be the result of keeping the reserves where they need be. Insurance companies are carefully regulated to assure that they stay solvent.
- When insurance rates across the board for all companies increase, this could be the result of a natural disaster, where all insurance companies were impacted.