By Steven Ladd
Horan Companies
No matter what kind of insurance policy you buy, one thing has likely stayed constant — yearly price increases. It is most commonly noticed on our car insurance. The policy starts at $800 per year for example, and by the third renewal, it’s over $900. The car is the same, no claims, no tickets, same address, same path to work every day, and yet you’re paying 10 to 15 percent more than when you began the policy. Why?
Insurance carriers, like so many other companies, raise their prices. They take what are referred to as rate increases. Each company does this at a different point in the year. A company that renews every six months can do this twice a year, while annual renewing carriers do it once. Depending on how poorly the insurance company did financially the previous year, you could see small increases such as 1 to 2 percent or up to 12 to 15 percent or higher.
Even with no changes at all to you or your policy, if the area you live in happened to be one that yielded significant losses for your insurance company, they would need to make up for some of those losses. Let’s suppose you also had a claim and thus lost your “safe driver” discount. The rate increase coupled with the lost discount can really make the costs soar.
What can you do? Do you call the company and say, “Bring my rate back down or I’m going elsewhere!” You could try. Perhaps you have. You will likely find a sympathetic ear on the other end of the phone, but little else. Insurance companies generally do not rewrite existing policies, particularly not ones that have only been on their books a few years. One of the better solutions can be to shop the policy around, which I recommend doing every three years. Just because one company did not fare well in Onondaga County doesn’t mean others didn’t as well. There will likely be a couple of options for you to consider that might ultimately lead you to a new carrier.
Paying less for the same product or service usually makes good financial sense. However, be absolutely sure that the insurance coverage you had on the prior policy is the same or improved on the new one. If you do decide to call your current insurance company for a rate reduction, and you get one, then something on the policy has probably changed. Review the declarations page (the document that shows your coverage) from the one with the higher rate against the one with the lower rate. Make sure they are identical!
If you have an insurance question that you’d like answered, please email me and I’ll answer directly or in a future column.
Steve Ladd can be reached at steven.ladd@horan
solution.com.
