In the past, you did your research and decided on home owner’s insurance and automobile insurance that gave you the best price quote for the insurance coverage you needed. However, as time has gone by, you may have found the cost of your home owner’s insurance premiums or auto insurance on the rise. There are many reasons why the price you pay for your premiums may increase. Understanding these variables can help you ask the right questions should you contact your insurance agent for help.
An Increase in Claims
Most people understand that if they make a claim, their home owner’s insurance or auto insurance rates are likely to rise. Insurance companies believe that once you’ve filed a claim, you are more likely to make another in the future. However, in some situations, an increase in claims by others may cause your rates to go up as well. The fact is, premiums that are paid by individuals who don’t make a claim help to financially compensate for the claims others make. There are also situations where natural disasters like the large hailstorm in Dallas, Texas, in June 2013, or an increase in crime causes an overall rise in claims, and therefore, your rates may go up. Even natural disasters far away can have an effect: Hurricane Katrina and Superstorm Sandy both caused rates to rise nationwide because of the large number of claims filed.
Inflation
It’s hard to miss the effects of inflation on gas prices or in the groceries you buy. Insurance companies are experiencing inflation as well due to the cost of healthcare, repairs, and replacements. The price you were given on your home owner’s insurance or auto insurance quote was based on costs at that time. If it has been a number of years since you first bought your policy, the costs may have risen, resulting in an increase in your premiums.
The Overall Economy
Insurance companies don’t simply put your premium payment in a special account to dole out when you need it. They typically invest this money in various places to build capital so it is available when necessary. Unfortunately, when the economy is down and interest rates are low, insurance companies may not make as much money as they need to cover claims. This can result in an increase in premiums for their clients. Most people take the time to get a home owner’s insurance quote or an auto insurance quote before they make their final purchase. Over time, the premiums these individuals are quoted may change due to a variety of factors. The most common reason is due to a personal claim; however, there are other situations that can result in an increase in premiums. Understanding these reasons can help an individual accept the increases and ask the right questions when they speak with their insurance agent. If you are looking for a home owner’s insurance quote or an auto insurance quote, contact us. We can help you understand the variables that affect your insurance costs and find the lowest premiums available.