Why Did My Insurance Agent Raise My Rate?

 



Oh, if it were that simple!

Insurance agents do not set rates. They sell and service policies for insurance companies. Insurance companies can change their rates by filing with the Texas Department of Insurance (TDI). They are required to provide an analysis that supports the requested rate change. State law requires that rates be reasonably related to all costs and based on sound actuarial (calculation of risk) principles.

Insurance companies consider factors that affect the cost for all claims, including but not limited to inflation, riskier driving, and weather events.  Inflation affects the cost of parts and repairs, and as companies pay for the increased cost of the number and severity of claims, they are forced to raise rates to make up for those costs. The frequency and severity of weather events also add to claim costs overall.

Here are some other things insurance companies consider when calculating a rate for each customer:

For home insurance, insurance companies may consider:

·         Your home’s age.

·         Your home’s roof age and material.

·         Where you live.

·         The cost to replace your house.

·         Your claim history.

·         Your credit score.

For auto insurance, common factors include:

·         Your driving record and claims history.

·         Where you live and how much you drive.

·         Age, gender, and marital status of all drivers in the household.

·         Your occupation.

·         The cost to replace the car you drive.

·         Your credit score.

·         Your vehicle’s year, make and model

If some of these factors have changed since your last renewal, it could raise or lower your premium. This includes characteristics that change over time, such as how much your home or auto is worth. These changes can affect the amount you pay from one renewal to the next.

There are some rating factors that you have some control over.  Be proactive in reviewing your insurance renewal offer. If there is a substantial increase, and you’re not sure why, ask your agent to explain the increase. There may be something else going on in addition to a statewide rate increase. Ask if you’re getting all available discounts. 

Talk to your agent before you file a claim.  If your claim payout is not going to be much more than your deductible, the amount you get may not be worth the loss of a “claim free” discount.  Even if the claim payout itself does not result in a surcharge, it could affect your eligibility for coverage with another insurance company, should you decide to shop for a better rate. Insurance companies typically consider any claims that have occurred over the past three years.  Some companies offer a bigger claim free discount if you’ve been claim-free for 5 years.

If you decide to shop for a better deal, make sure you get an apples-to-apples quote by providing a breakdown of your coverage types and limits.  This information can be found on the “Declarations” page of your policy. If you get a better price elsewhere, but you're losing a lot of coverage, it might be better to ask your agent if they can adjust your coverage and limits to help bring the cost of your policy down.

 


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