Why are premium rates so different between carriers?

Behind the scenes in the insurance world, there are more factors than you realize affecting the price of your policy. When trying to make an insurance price comparison, you may wonder why insurance is so expensive. Each company has their own underwriting guidelines that determine how much they charge for premiums.

Some things that may impact your rate:

• The property’s age and location

  • This one’s important. A car that’s regularly driven in a city with congested traffic and high crime rates, is going to cost more than a car that’s barely driven and typically in a more rural area. Along with that, an older home in a high crime rate area is going to cost more, and a newer home in a safer area is going to cost less. Age and location, regardless of the property itself, are going to contribute in different ways across carriers.

• Any property upgrades and additions

  • Along with age, upgrades and additions to your property may contribute to your premium. A car with safety features like blind spot warning and automatic braking is going to cost less than a car without these features. Newer cars typically have these features factory installed, while older ones may not. A home with upgraded roofing, plumbing, or electrical systems may be eligible for discounts, where as a home still rockin’ that 1960’s electrical system may not. However, some additions may increase your premium. A home with a pool and a trampoline is going to cost more to insure than an identical home right next door without those fun additions. Upgrades and additions contribute to the risk factors that insurance companies use when rating a premium.

• The occupants’/operators’ age

  • You might see where I’m going with this. Age is important, whether it’s the property, it’s features, or the one in charge. Teenagers, young adults, and the elderly are considered higher risk than someone in their 30s or 40s.

• Claims history

  • If you live in an area where there are frequent hurricanes that tend to damage houses, or near a river that constantly floods, you may be subject to a higher rate than those who do not fall into that area. If an area frequently experiences claims, the average premium rate is going to be higher than an area that does not.

• Credit score

  • With some companies, credit score is very important when determining a rate, or even eligibility to be insured with that company. Other ones, not so much. No matter your credit score, there will always be an insurance company that can cover you to the fullest of your needs.

• Whether or not you bundle your policies

  • A lot of people don’t know that bundling your home and auto policies can save you hundreds a year. You might have chosen the best rate for each policy individually and gone with two separate companies, but if you join your home and auto policies under one company, you can end up paying less than before! Bundling policies can play a huge part in your premium rates.

As you can see, there are many factors that go into insurance premiums. It's important to shop around and compare rates. Having an agent you can trust to find the best valued policy for your needs is the key to getting the most for your money.

We understand that insurance can be confusing. That's why we’re here to help you every step of the way. We will work with you to find the best policy for your needs and budget. Contact us today to get started!