Absurdities of How Insurance Premiums are Calculated

Miscellaneous and Personal Stuff I Must Share
1

Just needed to share this because it’s absurd.

I have a house with an in-law apartment in the basement. For 5 years, my brother and his girlfriend rented it. Each had their own car and insurance policy, and in accordance with The Rules, I listed them on my policy as household members. All was kosher.

They moved out in early 2025.

Recently I received my auto-renewal and it was up to $3700 for two drivers and three cars (one rarely goes out these days). This is important: For my wife and me, there have been zero changes. No accidents, no tickets, same cars, nothing at all. The last change of any kind, a new car, was 2021 and the last ticket or accident for either of us was 20 years ago.

I realized that my brother and his girlfriend were still listed as household members. I thought, well, fewer potential drivers will mean lower premiums, so I called my agent. She removed them and the premium rose to $4000.

Look, I understand how statistics and actuarial tables work. I get that they will have some correlation somewhere to justify this. But I am sorry, I am calling Bullshit.

2

I assume that $4000 premium is only auto, right? It doesn’t include your homeowners policy.

A)Call your agent and ask why it went up when you removed people from your household. It’s possible you lost some sort of bundle deal and need to make some changes to your policy. Also, ask why it increased. Mistakes happen. One of my policies (business worker’s comp) once took a huge jump when I made a change and it turned out the agent made a mistake the previous year and left an employee off of it, so adding them back on increased the premium.

B)Shop around for new plans.

C)Consider replacing your agent with a broker. A broker is like an agent, but they work with multiple insurance companies and will price shop for you.

Also, look at the policy to see what they’re charging for each vehicle. You might find out that the premium on one (or more) of them skyrocketed for some reason. Parts got more expensive, they’re getting stolen more often, the garaging location is a higher risk of thefts or vandalism than it did before etc.

Don’t get me wrong, it could be semi-arbitrary (ie ‘you’ve been with us for a long time and we think you’ll pay the extra money instead of going through the hassle of switching companies’), but that’s why it’s worth shopping around from time to time.

3

Especially (b). We were with GEICO for 40 years. My wife was listed as primary on the policy, but she no longer drives, so I asked about dropping her. That would have RAISED the rate. Ok, mayyyybe, male primary driver. “Nevermind.”

But then the renewal was higher anyway so I shopped around. Went from over $900/6 months to about $250 for same coverage. That was with Liberty Mutual.

Then a couple of weeks later we got homeowner’s renewal, which had also gone up. That was with with Traveler’s but serviced by GEICO and we were getting a multi-policy discount as a result.

At the same time I realized the guy who sold me my life insurance also does auto and home. He did the work and we wound up with Erie: auto, home, AND an umbrella policy for what the homeowner’s alone would have been. Same coverages.

Yes, I’m irritated with myself for trusting GEICO not to be abusing us.

4

Yep. My broker told me that there’s often no rhyme nor reason that he could see why prices jump all over the place; sometimes you just find yourself in a weird demographic slice with one company while another company has no such slice. Find a broker and see what they’ve got.

Some insurance companies don’t go through brokers so you have to call them individually. Idk what companies currently don’t, but the last time I checked many years ago Geiko and maybe Progressive or one of the other heavily advertised companies needed to be called individually.

5

Speaking as a former P&C agent for Progressive, as well as doing customer service for them, and then claims for a different company, it’s rarely arbitrary, but often unfair in the personal sense.

Like when a carrier raises rates 4-8% nationwide, to subsidize losses in high-risk areas, like Florida, or New Orleans. But if/when they exit those markets, they never seem to drop rates to allow for that reduction in exposure. The worst of both worlds.

:roll_eyes:

But insurance is about the laws of large numbers and it means a lot of very good drivers are paying higher rates to cover the uninsured, underinsured, and just bad drivers out there.

So, given the costs of repair and parts have skyrocketed, the sheer number of propriety parts and repairs out there, it can be drastically unfair to individuals and that’s before we ever consider the profit seeking nature of most carriers these days.

When you would go to an agent, before my time as it were, you might get a pamphlet, a sticker, or other minor mention. When I was a child, advertising was often just a subdued commercial on local TV or “Mutual of Omaha’s Wild Kingdom”.

Now everyday when I’m streaming something with commercials, I’m bombarded with loud, sophisticated (and not) commercials blaring out how great this or that carrier is every 20 minutes, with 2-4 different commercials in rotation.

So you’re paying for them trying to convert everyone ELSE, not just cover you. And still, despite those additions, rates don’t seem to go down.

And even knowing better, I’ve been burned on the whole thing. I have had my Homeowner’s carrier for almost 20 years now, and after the first year or two, hadn’t been careful to check how they were amending my coverage while raising my rates slowly but steadily. Until I made my first (!) claim in 20 years for a roof, and they nickeled and dimed me on every tiny exception, and created truly one in a million reasons why this or that damage came from something uncovered.

Well, new roof will be finished Monday, though the battle on the siding continues. Once it’s all done, so are they. If you don’t care for how you are treated, the ONLY thing they notice is bad publicity (and it has to be REALLY bad) and churn. So give 'em the churn.

6

A couple of years ago, our house insurance went up 150% in one year. I called the company (we’d been with them 15 years) to find out what was going on.

Apparently, a recent rise in house assessments in our local area (about 10%), meant that our home was now suddenly classed as a “luxury home” No changes had been made, but now it seems we were living in luxury.

So we lost our no claims bonus, our age bonus, our “being near a firehall” bonus, etc. etc. and this justified more than doubling of our premiums. I explained to the agent that this seemed a tad insane, and they let me know that they could save me 10% by increasing my deductible a large amount. I declined.

Shopped around and got identical coverage for just a bit more than we paid the previous year.

Called the first company back, and they could not give a shit. They lost a loyal 15 year customer. I hope they go bankrupt.

7

One place where, IMO, a broker really proved their worth was when I was renewing my homeowners/auto/motorcycle insurance. You’d think bundling them all together would save the most money. However, my broker found* that putting the homeowners and auto with one company and the bike with a different company saved a good chunk of money. Turns out the company that she bundled the house and car with because it was the best deal, doesn’t like insuring motorcycles and therefore charges quite a bit for them. Progressive, however, loves bikes (IIRC, they even ran commercials with Flo as a biker), so we put the bike there. Saved something like a thousand dollars a year that way.

*I say that she ‘found’ that out, but it’s more likely that she already knew that ‘trick’. Which, again, is a great reason to use a broker. Stealing a term that Adam Savage loves to use, they have a lot of ‘institutional knowledge’.

I’m 95% sure my Progressive insurance went through my broker, but it was quite a while ago and it’s possible she had me do that part on my own.