Originally posted 1/9/18 reposted 1/23/18
As an insurance professional, I am often asked, “Why do my insurance rates keep going up?”
This is a question that depends on several factors. Some have to do with your insurance company. Some have to do with you. Some have to do with the people in your community.
Several things increase rates and in my 17 plus years as an insurance professional; I have seen most, if not all.
Two terms will help you understand the principals of insurance and why rates do what they do. The first is shared risk, the second is the law of large numbers.
Insurance is a shared risk. This means that everyone that is part of the same group shares in premiums and losses. The bigger bite of the pie you take the more it will cost to remain part of that group. The law of large numbers. The larger your sample size (see zip code) the more likely it is to predict events (losses) occurring.
This is why where you live can and will affect your insurance costs. Zip codes with a higher loss propensity or a higher rate of crime will pay more for insurance.
Claims of other people may even affect the price you pay. When people are looking for home insurance during the buying process, they may pay more if the prior owner had a claim. A home that had one claim is more prone to have another.
The number of people driving without insurance also factors into a rating. Recent data states that 12.67% of drivers in Oregon and 17.4% of drivers in Washington operate without insurance. By state rank, Washington is #7 and Oregon is #21 for people driving without insurance. Florida was #1 with 26.7%, Maine was #51 with 4.5%.(1)
Things that have to do with you;
A history of claims or driving activity such as tickets. Having losses increases rates. So too does having an accident or getting a ticket.
The type of vehicle you drive can also change the price. Today’s cars have more electronics than the vehicles did 10 years ago. The safety of the vehicle, the cost to repair the vehicle, as well as the probability of theft will cause rates to fluctuate. Today’s vehicles are made of lighter materials, like aluminum, and cost more to repair.
Your Insurance Company;
Often, if you have your automobile, home, and life with the same company (Bundling) the rates will be lower.
The type of payment plans you pick will also affect your cost. Most companies will give you the best deal for paying it all up front. Paying via direct deposit may be less than credit card. Eft and credit cards are often less than a cash monthly bill. This is due to the likelihood that the bill will be paid on time.
The cost of medical treatment has risen over the last decade also. Recent Oregon legislation, changing the Uninsured Motorist and Personal Injury Protection laws, puts a great burden on the auto insurance companies. (2) This means the insurance companies are paying for more medical bills than anticipated.
Rates are also affected by things like discounts. Different changes or time periods can cause discounts to be removed.
Obviously, it takes more than 15 minutes or an infomercial to help understand the protection that you and your families deserve. Every company, driver, and situation is different.
If you want to understand your coverage and how much it will cost give me a call today. 971-303-8508.
(2) see the explanation of the 2016 changes here http://www.rosenbaumlawgroup.com/lawyer-blog/40-oregon-uim-and-pip-changes
*Photo by Ben White on Unsplash