When I present someone with their home and auto quote I will get a "Can you do any better than that?" question every once in a while. I would like to address that.
Nope. I'm sorry, I can't. I don't set the price. I think that is a common misconception. As insurance agents we do not choose a price for you. I ask my players (that is what we call our clients) what they are currently paying just so that I know where they are at. Am I going to get you a good price? I sure am going to try, but more then that I want to make sure you are insured properly. I am going to get you the best rate I can but I am not going to under insure you to do so. Also I can provide a service to you that is unique to our Insurance Agency, if you are a client I hope you know what I mean. If not give me a call, I would love to meet with you.
Sooooooo....Why is Insurance not a flat rate? To understand why you may pay $50 a month for your vehicle and your neighbor may pay $100 you need to understand what factors insurance companies use to come up with your rate. Some companies take more things into account and some don't. I will just give you a number of different things that companies we write for look at.
1. Age, Sex, Marital Status
So Insurance companies are ageist, sexist and relationshipists? Yeah. They are. They base rates on statistical research. Are you a single male under 25? You are going to have to pay for that. The best rates often go to married, middle age women. The companies are always looking at this data year to year though so if the driving habits for specific groups change so may the rates. Good or Bad.
2. Credit Rating
Yes I need your SSN. No I will not steal your identity (we also sell identity theft insurance), no I will not see what bills you are behind on, and NO I don’t even know what your credit score is. It is all done behind the scenes. Many insurance companies look at having a poor or no credit score as well as having a number of credit inquireies and open and closed accounts as being of higher risk. Work on getting a better credit score and you will get a lower premium.
3. Current Insurance
If you do not have current insurance your rates are going to be higher. The insurance company is not too sure what kind of insured you are going to be. One way to help this out? Before you buy a home make sure you have rentors insurance. Do not let your insurance lapse.
4. Driving Record
We are not all perfect right? I get it. I haven't gotten a ticket for a long time but I am the type of person that if I get pulled over for speeding I cry. Not just so the cop feels bad and cuts me a deal. I truly cry because I am mad at myself and embarrassed and I think it is just a natural reaction. Even though I cry...... I get a ticket. Seriously. I think I have had like 4 speeding tickets in my life and I have been pulled over 5 times. Now my Hubby. He is unbelievable. He NEVER gets a ticket. Ever. Why is that? I don’t get it!!!! He doesn't cry, I don’t think he even feels bad about it! Totally unfair. Ok anyway, where I was going with this is even good careful drivers can sometimes make a mistake that lands them a ticket. Insurance companies look at driving records when setting rates. A bad reputation is hard to shake and it is hard to maintain a perfect record but usually penalties fall of your record in 3-5 years. A messy record takes a toll on your premiums; a squeaky clean one will give you discounts usually. There are also some programs like the minor violation forgiveness and minor accident forgiveness that help with that.
5. Prior Claims
This one is hard. Why do you get insurance? To protect you right? Say Yes. Ok so if you have a something go wrong you report the claim. Great. That is why you have insurance and it means the system is working. BUT if you file a claim that means your insurance is likely to go up. And if you file too many claims your carrier may even drop you. Kinda crazy right? It seems as though you are penalized for using the insurance for the exact reason you have the policy in the first place. If you are thinking that you are right and I don't disagree with you but you have to look at it from the insurance company’s point of view. Someone who is submitting a number of claims is looked at as a risk. Also you need to know there are some people out there that have just ruined it for all of us. You may want to think about a strategy to filing a claim. What line would be crossed where you would file and where you would just pay for the damages up front, then look at your deductible and make sure that those things line up.
6. Your Vehicle - Type and Age
Again we go back to the statistics here. The statistical data is not only used to determine collision coverage rates but liability and med pay coverage premiums. Cars with High Frequency claims - SUVs, luxury cars, sports cars = high premiums. Lower priced sedans usually equal a lower rate because they cost less to repair and replace. Seat belts, airbags, and other safety equipment are also looked at in determining lower rates.
7. Your Home - Type and Age
When we insurance homes we come up with a cost of replacement. This is done by inputting a lot of information about your home in a special tool that figures out the approximate cost of what it would be to rebuild your home in the event of a catastrophe today. You are going to get a better rate if there are any updates done with the Electrical, Plumbing, HVAC, and other things. As well as what your home is made of. Brick, Concreat, and Stone are cheaper to insure. Most home insurance companies add on a 25% above the cost estimater cushion. I love this. We all know about inflation and building supplies so I like to know that if something happens in a couple years and it may take a little bit more to rebuild my home I am not going to be cut short.
8. Where you Live
Urban areas have higher rates then more rural areas. Why? NORMALLY theft and accidents happen at a higher rate in these areas. The number of homes and autos per square mile is an important factor in indicating the chance that a claim will be filed. 80% of accident happen within a 25 mile radius of a person’s home. Road conditions, law enforcement, local cost of auto repair, traffic patterns, natrual disaster high risk areas, building costs in the area, fire hydrant location, fire department, and hospital location are all factors when determining rate. Insurance companies have many different rating territories across a single city at times.
So to recap. I do not get to set your premium. In a way of looking at it YOU set your own premium. Somethings like age and sex you can't change, but most factors you can. So instead of asking me if I can do better on that rate, maybe the right question is: What can I do to get a better rate?
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