A common and frequent question insurance agents are asked is “Why did my rate go up?”. Insured’s get their renewal bill for their insurance and like all of us, the first thing you notice is the price is higher than last year. Every year all bills go up such as cable, electric, etc. but insurance bills seem to increase more than other bills and the question is why.
The first thing to remember is insurance is a business like any other and they are in business to make money. The amount of money paid for insurance premium is small compared to what the insurance company could have to pay out. The company could have to pay out $100,000, $300,000 or more to pay a claim and claims are the number one reason premiums increase. Even if you don’t have any claims we are paying for each other, so claims increase the cost and this cost is spread out among all of us. In this state, all rates have to be approved by the Insurance Department. So insurance companies have to prove they have lost money before they can raise their rates.
Another issue is that we here in Connecticut are “sue happy”. What should be a minor claim, ends up becoming a huge pay out because some people see any claim as a way to make “free” money. Whether its padding a car repair bill to pay for the deductible or going to a doctor for an ache that isn’t really there, whatever, the company has to pay out on claims and eventually we all pay for it. Some claims are legit and should be paid but insurance fraud hurts us all.
Finally as mentioned before, insurance is first and foremost a business. The company is in business to make money. Like any business they have bills to pay such as rent, payroll, electricity, insurance, etc. Just like with us individually and other businesses, these bills increase each year. The cost of doing business goes up each year for the insurance company and these costs get passed on to the consumer and in insurance the consumer is us, the insured.
The best way to combat higher prices for insurance is to shop for the best rate possible. There are hundreds of insurance companies and each company has its own rates. Shopping around for the best rate on every renewal is a sure fire way to keep premiums low. Here at Barth Insurance Agency, we will shop for the lowest rate every renewal for you, so you don’t have to worry about it.