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We’ll explain the three most common reasons that auto insurance prices change. You may or may not be able to change it but at least you’ll understand.
KEY TERM: Renewal
Insurance policies have a term, a set period of time that they are set up for. In auto insurance that almost always either six months or one year. At the end of each term, a new one starts. This is called a RENEWAL. The renewal is when the company can make changes to your policy. This usually means a change in price.
The reasons your auto insurance price may change at renewal are as follows:
#1: COMPANY RATE CHANGE
Companies have the right to change your price at each renewal (the end of one policy term and the beginning of another one). The most common reasons for a rate change are that the company experienced a lot of claims in the prior term or the company lost money in some other way. Since they lost money in the past they’re trying to make that up by increasing your auto insurance price.
#2: LOSS OF DISCOUNTS
Discounts are king in insurance. If you lose one your price will go up.
We created a great video and infographic on this topic:
The 8 most common Auto Insurance Discounts – https://www.shineinsure.com/common-auto-insurance-discounts/
#3 COVERAGE CHANGES
This is the lowest on the top 3 totem pole as it’s much less likely to be the cause of your insurance premium changing. But it’s worth a mention. Companies can change the coverage you have on the policy.
These changes could include:
– Raising the deductible
– Lowering liability limits
– Removing certain coverages
– Adding Exclusions
– Changing the wording of your coverage forms
In our opinion, buying a six month policy is a mistake. That’s because it gives the company twice as many opportunities to change things on you. A one year policy is the best option.
Learn more about us at:
Our Site – www.shineinsurance.com
Our Blog – www.shineinsure.com/blog
Our Podcast – www.scratchentrepreneur.com
Our Course – www.makeinsurancesimple.com
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