Understanding Rates

UNDERSTANDING RATES

People are driving into each other because they’re on their cell phones. Homeowners are making more claims than ever for leaky bathrooms. Autos with more technology continue to drive up repair costs. Brush fires and natural disasters are rampant, destroying homes.

Insurance companies can’t keep up with the amount of claims made these days. Year on year, it’s harder for carriers to keep rates low because they have to pay out for claims. Rates are definitely on the rise, and insurance agents have no control when a company takes a rate increase. We don’t like it either when your rate goes up. We want to keep you happy.

This guide will show you how to be in control of your rates!

YOU NEED TO INCREASE YOUR DEDUCTIBLES

The purpose of insurance is to transfer large losses from you to the insurance company. Not small losses. Insurance isn’t meant to cover small losses. That’s the reason why you have a deductible, it stops people claiming for absolutely anything and using insurance as a maintenance policy which ultimately drives up rates for everyone.

So which deductibles should you go with? $500? $1,000? These are the most popular deductibles today, but they were also popular 30 years ago. Do you remember what a gallon of gas cost 30 years ago? How about home prices? Everything costs significantly more today, but we forgot to move our deductibles up with inflation. Small deductibles multiplied by higher frequency of claims mean we all pay higher rates.

We’ll let you on to a secret… most companies have really big discounts for higher deductibles.

The problem is that most people, including agents, are so stuck on the $1,000 deductible that they don’t ever quote higher deductibles to discover what you could be saving.

Which deductible amount is best, then? First, consider your emergency fund, or the amount you can comfortably pay out of pocket. Then, think about how often you’ve filed claims in the past. Is it never, once every 5 years, once every 10 years? It’s not that frequent, is it? If your deductible is small, know that you’re paying for coverage where the cost per dollar of insurance is most expensive. Increase your deductibles and save your money. Most companies are now offering big discounts for $1,500, $2,500, and even $5,000 deductibles.

MORE WAYS TO SAVE ON YOUR INSURANCE

DON’T FILE SMALL HOME INSURANCE CLAIMS

Most home insurance companies won’t insure homeowners that have made a large claim or multiple claims in the last 5 years. Filing small claims will not only make it difficult for you to get a quality home insurance policy, it will cause you to lose your home/auto multi-policy discount, which could increase your auto insurance up to 25%. Obviously, there are situations where claims are unavoidable, but if the damage is only minor, talk to your agent before you decide to claim. They’ll be confidential, and they’ll help you determine if it makes sense to file it.

DRIVE YOUR VEHICLE CAREFULLY

The single biggest impact on auto rates is how well you drive. Even a minor violation can hit your rates hard. Depending on your insurance company, a minor violation could mean you not only get a surcharge for the violation, it could also cause you to lose your 5-year accident-free discount.

In California, if you do any of these:

Get 2 minor violations

Cause an accident with bodily injury

Get a reckless operation violation

Or, Get a DUI…

…you lose the CA Good Driver discount, which causes your rates to double or triple. Some accidents are out of our control, but try to do whatever you can to maintain a clean driving record.

BUNDLE YOUR POLICIES WITH ONE COMPANY

The biggest discount is the multi-policy discount. You get this discount by placing your home and auto insurance together with the same company. Some companies also offer discounts when you bundle your umbrella policy or rental properties. Try to place your policies with the same insurance company to maximize your discounts. Unless there is something unique about your situation, having different companies will only increase your costs.

MAKE SURE YOU’RE GETTING ALL AVAILABLE DISCOUNTS

Insurance companies often give big discounts for things you wouldn’t expect. If you are looking for auto insurance, you can get discounts for specific occupations, having a 4-year college degree, or a Good Student discount for those for have over a 3.0 GPA.

For home insurance, there are discounts for central burglar and fire alarms, guard gated communities, internal sprinkler systems, HOA discounts, and discounts for newly purchased homes. If you think you could qualify for an extra discount or two, ask your advisor and they’ll make sure you’re getting all available discounts.

REMOVE UNNECESSARY COVERAGES

Insurance policies can have coverages that you don’t need. Some of these can be removed to reduce your rate. Regardless of the cost, it doesn’t make any sense to pay for something that you’ll never use. Consult with your insurance advisor to find out if you have any coverage that you don’t need and remove it.

Insurance policies can have coverages that you don’t need. Some of these can be removed to reduce your rate. Regardless of the cost, it doesn’t make any sense to pay for something that you’ll never use. Consult with your insurance advisor to find out if you have any coverage that you don’t need and remove it.