Shop Insurance Regularly
If you haven’t shopped your home, auto, and health insurance around recently, you may be foregoing hundreds of dollars of savings each year, even if the policy you bought years ago was the absolute best rate you could find at the time. Gaining a better understanding of insurance market fluctuations, scheduled rate increases, and how insurance agents get paid should help you know why it is so crucial to shop your insurance regularly.
Insurance Rates Fluctuate Up & Down. Have you ever wondered what goes into determining your insurance premium? There are hundreds of factors that determine it, but one of the largest factors is the number of claims filed in your area or region. If, relative to last year, there were very few claims filed by all policy holders, then many insurance companies will re-evaluate their insurance premiums and lower their prices in order to capture more market share. If you have a current policy with a company and they lowering their insurance rates, that means they will automatically give you a rate reduction as well, right? Dream on. Most rate reductions only apply to new policies. If you received a rate reduction at your renewal, it was probably based on some other factor, and if you could cancel your current policy and get a new policy with the same insurance company, your premium would probably be a lot lower than your reduced rate!
Many Insurance Companies Have Scheduled Rate Increases. Many insurance policies have what they call a “modest scheduled premium increase” every year. Some people consider it a hassle to switch insurance carriers, and most insurance companies think that if your insurance premium goes up by just a little bit, you won’t deem it worthwhile to shop your insurance. However, over years modest premium increases add up to very large premium increases. If on your auto insurance policy your company just raises your rate by $30 every six months, by the end of 3 years you will be paying almost $200 more each year for your auto insurance!
Shopping Eliminates Complacency in Insurance Agents. Although your insurance agent may be very nice, as a consumer you need to remember one thing; the more you pay for insurance, the more money he or she makes. If your agent feels secure that you will be loyal and will not shop your insurance, your agent may not be so inclined to make sure that every single discount is applied to your policy. I have heard of many cases where folks who have had insurance through the same agent for years started shopping to get a better rate, and all of the sudden their current agent, like pulling a rabbit out of a hat, came up with more discounts that saved them hundreds of dollars. In most cases those discounts probably could have been applied years ago.
