Why Do The Insurance Companies Keep Raising My Rates?

It’s been nice to pay a little less at the gas pump lately.  But, you may be feeling the squeeze in other places – like your insurance premiums.

According to MarketScout, property / liability insurance premiums continued to increase through 2012.  Homeowners premiums were up 4-5% and Automobile premiums were up 3%.  Compared to the same period last year, rates for Commercial Insurance increased an average of 5% in November 2012.

Why do my freakin’ insurance rates keep going up?

Property / Liability (Business, Home, Auto) Insurance premiums can be very cyclical.  Insurance companies beat each other up on price during a soft market while insurance premiums decrease.  In a hard market, when insurance companies increase rates and tighten up underwriting, it can be downright tough keeping your rates down – let alone keeping insurance coverage in place.

Insurance carriers can’t always keep up with a downward trend in insurance premiums.  Paying out more on claims than that which is paid in as premium can only last so long.  Insurance companies generally make their profit by investing the float (the money in their bank account), but can sometimes make an underwriting profit if they are lucky enough to have very few catastrophes in a given year.  So, we eventually hit the breaking point and premiums inevitably start going the other direction.

How can I keep my insurance premium from going up?

The answer is: you probably CAN’T keep your premium from going up.  Unless, of course, you sell your business, house or car.  There is little, if anything, you can do to keep insurance companies from increasing rates – it’s part of the ebb and flow.

However, you can do things to make sure your insurance premiums are competitive.  For instance, keep your self insured with an Independent Insurance Agent (shameless plug), who can move you to a more competitive carrier while you keep in place that long-lasting and trusted relationship with your favorite insurance dude.  Also, you should speed less, pay your bills on time (credit affects rates), and have your agent point out any discounts for which you could be eligible (there are many).  Oh, and having teenage drivers on your Automobile policy hurts – big time! So, give your kids away or teach them to be safe drivers.

If you own a business, workers compensation premiums in particular could hit you hard as the market tightens up and premiums increase.  There are some industries for which insurance carriers become very averse in a hard market.  If you are not working closely with your agent or broker, you could find yourself without any insurance at all or a doubling or tripling of your premium.
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While you may be feeling pretty good about things at the gas station, you might be feeling the pinch with your insurance company.  You may be tempted to reduce your insurance coverage to keep premiums in check, but be careful with this and be sure to work with your trusted insurance adviser – an Independent Insurance Agent and Broker, like Jon Jepsen at SentryWest Insurance in Salt Lake City, Utah.