Premiums increase for a number of reasons. Too many to list here, and some reasons I'm probably not even aware of. A few that I am aware of are:
Inflation - We aren't the only ones who need and deserve raises at our employment, so do those who work for insurance companies. There's a bigger reason for this needed raise; the price of items we use for everday living (i.e. food, toiletry items, gas, electricity, just to name a few) increase in price on a consistent basis. To think our insurance premium would remain constant is the same as thinking the cost of our goods won't increase. They've proven to always increase over time. So will your insurance premium.
Cost of repairs - Just like the price of food and gas increases, as does lumber and automobile paint, and like I said before, the cost of labor (wages for employees). Insurance companies must prepare for these increases. New cars no longer run $10,000. Likewise, houses aren't built for $70 sq/ft anymore.
Insurance companies have insurance - That's right, even insurance companies like Travelers Insurance and Safeco, and even State Farm have insurance. We have insurance in case a loss (damage) exceeds are ability to pay for the repair. Insurance companies need it for the same reason. When their rates increase we should expect ours to do the same.
Credit Report- Your credit score may have been 750 when youfirst purchased the policy, but now it's dropped to 680. That affects your rate. Insurance companies have done studies that show higher credit scores produce less claim activity. Like any report, this isn't true in every situation, but it is in most.
Other than doing your best to avoid claims, your credit is probably the only other thing you have control over that affects your renewal rate. But wait, Nick. Don't we have insurance so that someone will pay our claims? Yes, but who deserves to pay less in premium? You, who has a claim, or the couple next door who have never placed one? I agree. They deserve to pay less.
The short of the story is good credit and limited (or none) claim activity helps hold the reigns on insurance companies increasing your premium.
I will admit, there are times when insurance companies make mistakes on offering extremely low rates. Did you recently go with a company that was so much cheaper than everyone else? And now you find yourself shopping again because they increased you through the roof? This happens very often. Be leary of those extremely low initial premiums.
Also, keep an eye on the percentage of increase. 10-25% is normal. Anything over 25% should be looked at, maybe shopped. It all depends on what you were paying before the increase. I would also suggest that you judge the service based on the price. Dirt cheap, you may not get good service.
I'm currently insured with Travelers. I've witnessed my rate increasing steadlily. I've made no claims. Zero! But my rate still goes up. I know it's because of some of the situations I've listed above. But the service I get from Travelers Insurance is excellent. I'm scared to move somewhere else. I'm happy, and I know I'm well-taken care of.
Do you feel the same way about your company?
I've attached a list of Arkansas insurance company rate increases for 2013. Find your company, see how much they increased, or in rare instances, decreased.
It's important to go with an agency that can quote your insurance with multiple companies. Our insurance companies include: Travelers, Safeco, Republic, Progressive, Cornerstone, Dairyland, MDOW, etc. If you endure a sharp increase and would like to see how it compares, don't hesitate to contact us.
My name is Nick, and I'm the owner of The Gann Agency. We are an independent insurance agency in Bryant, Arkansas. We pride ourselves on giving the absolute best customer service through a convenient insurance process.
Are you already motivated to make the switch? We'd love to have you!