I’ve Had No Claims, Why Is My Price Going Up?

This is the most common question we get and not everyone will like the answer. As much as all of us (myself included) would like insurance to be like a utility which is paid by usage, that’s not quite how it works. Rather than pay-by-usage, it’s more of a shared bank account to hold funds to be distributed when they are needed. 

Let’s say you are saving up for car repairs and at the time that you started saving a repair might have cost you $1,000 so you set money aside accordingly. You haven’t used that money but suddenly that same repair cost changes to $3,000. If you kept saving according to a $1,000 expected cost and now it’s time to collect the money to pay for a $3,000 cost, you would come up short. Therefore, as costs increase, so must the savings you’re setting aside to ensure the appropriate amount is there. This is a very simplistic calculation to try to explain something that has many more factors involved. Still, you get the idea.

An insurance company’s job is to have the money when you need it. If suddenly insurance companies didn’t have enough money to pay out claims because they didn’t collect an appropriate amount, we would have a very big problem.

That explanation aside, could you still be overpaying? Possibly. When you get your renewal bill, that’s a great time to look at your coverage and make sure you’re only paying for what you need. Also consider whether you have gaps in coverage that will be more costly in uncovered expenses than increasing your premium a little to cover them. These are great conversations to have with your agent. Your agent does not have personal control over pricing, but we do have the ability to customize coverage. We can also inform you about risks and trends and newly available discounts and programs.