Lo and behold, it is your renewal and the price is higher!
So you just got home from work today from and you are going through your mail when you notice a package arrived from Farmers Insurance. Lo and behold, it is your renewal and the price is higher! A range of emotions may pass through your body almost instantly. Disbelief, anger, confusion, hostility and they’re all valid.
Like you, I am also an insurance consumer. You might think because I sell insurance, one of the “perks” of my job is I get discounted rates for being a Farmers agent. Flatly, I am here to categorically deny that notion. Not only do I have to insure my car, home, life/income, but I also need to insure my business on a variety of levels. Like many of you, I see increases on a somewhat regular basis and I enjoy them about as much as any of you would. If you don’t mind, please give me a few minutes of your time to review some of the more common questions I get about a rate increase and some insight why rates only seem to go up…
Insurance is a business like any other
For starters, insurance is a business like any other. It has to make a profit to keep its doors open. Especially this industry; in the event of a major catastrophe, you need your insurance company in a position of financial strength so it can cover the claims its policy holders may have.
But like any other business, it has a number of fixed and variable expenses. Regardless of a fixed or variable expense, the costs of operating a business inevitably are passed on to consumers in the cost of their goods or services.
I have an older vehicle. I thought older vehicles were cheaper to insure. Why did my rate increase?
Many clients have taken the position that their car is a year older so based on the decreased book value, it should be cheaper to insure. To a degree, this is true, but the cost for replacement parts, the labor at a repair shop as well as the expense of processing the claim increase annually which more than offset the diminished value of the car.
I have a clean record – no tickets & no claims. Why did my rate increase?
Another common sentiment is that I had no tickets or claims this year, so why are my rates still going up? Truth be told, insurance companies EXPECT you not to have tickets or claims. The average driver has 2 at fault accidents in their lifetime. So statistically, you are not likely to have a claim. Also, insurance is considered a POOLED risk, meaning the premiums you pay help contribute to the costs of accidents involving other drivers.
Just keep in mind that when “your number is called,” those same other drivers will be helping to pay for your claims. Typically, a company will pay half of what it collects in premiums back out in claims and/or lawsuits, and they set their prices each year based on that philosophy. If it’s a bad year; say they pay out 53 cents of each dollar instead of 50 cents, they likely will add a 3% increase to the inflationary increase they already anticipated to make up for the additional losses due to claims.
Tips and Tricks to Lower Your Insurance Premium
So is there anything you can do to help keep your costs down? Sure. As your agent, I encourage you to keep in touch with me for our rating systems change over time and facets of your car or home may qualify you for further discounts.
For example, a new roof will normally lower your home insurance premium, as would a central reporting security system.
If you add a vehicle recovery system to your car like a Lojack, that can help lower your auto rates, especially if you live in a densely populated part of the state where rates of theft are higher.
But a great and easy way to lower your auto insurance rates is to take an online driver safety course once every 3 years. By doing so, you are showing your insurer that you make safety a priority which minimizes our risk. You may also learn something every now and then which could help you in adverse conditions. Below is the link for one of the more popular online courses that is currently offered. I’m not going to tell you it’s “must-see TV,” but the creators did as good a job as possible trying to at least make the course somewhat humorous.
The cost of the course is $19.95 per person but you can use the promotion code RC540, NJ201 or whatever other code you can find online to knock $5 off the cost of the course. Once you complete the course, you will receive via e-mail your certificate of completion which you can forward to me so we can apply the discount to your premium. It’s a great deal because you get the discount for 3 full years so your $14.95 investment will pay you back handsomely over time.
Another easy way to save some bucks with us is to take advantage of our Farmers Rewards Visa Card in which you will earn a 3% cash back bonus each time you use the card to pay your Farmers premiums. As far as I know, Farmers is the only company to offer this benefit to its policy holders for using their own branded credit card. There is no annual fee for the card and you even get 0% APR on purchases for the first 12 months. If interested, let me know and I can forward you the application to apply.