My coverage has not changed. I have not filed a claim. My credit score is the same as last year. Yet for some reason you see fit to raise my rate by over a hundred bucks a year. Michigan is not a disaster area (well, except our economy), so I don’t see any reason to play along with this ridiculous money grab.
Also, I don’t care what your computer says, it will not cost 294K to rebuild my 1760SFT aluminum sided house. That’s nearly 200 per SFT, and the average in my area is from 100 - 125 per SFT. (And no, the 294K does not include the cost of the personal property inside, that is a different line item).
I’ve been a customer for 21 years, but it may all be gone once I contact a few other companies.
Good luck, but it’s a vicious circle. When the economy goes bad, people tend to drop insurance in favor of buying food – esp. those who don’t anticipate having claims. Since insurance is all about spreading risk, fewer insureds means everybody’s policy goes up, even if the insurance company’s costs (to, for instance, do the repairs) stay the same (or even get a little cheaper). It’s called the insurance death spiral, and it’s not (necessarily) an insurance company cash grab. They know that big premium increases will mean loss of business (which will mean even more premiums and even more loss of business), so it’s almost certainly the case that they’ve slashed any internal costs they can before passing on such a high cost increase.
They pulled completely out of Louisiana – I know because they were our insurer – which leads me to think they had significant losses in the Gulf Coast region from Katrina and Rita in '05 and Gustav in '08. Possibly this is affecting them across the board?
Actually, there’s your answer right there. What do you think the insurance companies do with the money you give them? Put it in a big mattress? They invest it. So when the economy tanks, so do their investments. And as it turns out, insurance companies are in business to make money.
Yeah. For the first time in over 20 years with the same company, my car insurance (for renewal of the same car) went up by about 15% this year. I’m used to it going up when I get a new car, and then watching it drop for the next six or eight years. It was a bit of sticker shock this time. I actually priced other companies, but when you look at all the details, it just wasn’t worth changing to save about 10%.
But, jeez, I understand the rant. I didn’t get a raise this year either, and my insurance has gone up, my electricity has gone up, my cable has gone up, my internet has gone up, my phone has gone up, et cetera ad infinitum.
The only saving grace is that the price of gas is more or less stable, but I walk to work.
My plumber just told me that when a tree branch fell on his roof last year, it turned out to be an excluded event on his Geico homeowner’s policy. If they never have to pay out, they don’t have to raise rates so much. Profit!
No shit? They want to make money? Try telling that to your boss at your next performance review:
“Yes boss, I know I haven’t done anything different than last year, when I got 3 percent, but all my investments tanked, and I need to save for retirement, so I am gonna need you to just go ahead and give me that 15% raise.”
Any truth to the rumor that insurance companies hate writing homeowners’ policies, and generally lose money on them… they only do it because they know they will then get clients for auto, life, and other ancillaries (umbrella, for example)?
Any insurance brokers on this board can shed some light on that?
It’s true that multi-line business brings in more money, but it’s usually auto insurance that’s the big loser.
The bottom line profit/loss figure depends on what type of calculation an insurance company does. For instance, you could look simply at premiums paid from January 1 - December 31, and the amount of claims dollars paid out in the same period. Then you can add in claims that have reserves that haven’t been paid out. And then claims that haven’t been reported yet (a surprisingly large amount, usually).
Then you have to factor in the overhead cost of the insurance company, such as the people who administrate the policies and claims.
And of course, the investment income the insurance company made with the premiums.
So there’s a lot of factors, and depending on how an insurer wants to present itself (Meeting with shareholders? Everything’s great! Meeting with government regulators? Everything’s terrible, we need to increase premiums!), they’ll throw out different numbers.
For instance, there’s an auto reform taking effect in Ontario on September 1st, which lowers coverage for certain benefits if someone is injured. Insurers claim they are losing money in that area (which I can believe), and the figure I’ve heard the most is $1.2 billion in losses last year. But I have no idea how that number was arrived at.
crazyjoe, I feel your pain. My own insurance premiums went up this year too. Rereading my post, it does sound a bit snarky. Sorry about that.
I suggest finding an insurance broker who can access plenty of markets and get quotes from them. And you’re right, $294K does seem a bit high. Ask the broker to do a Beockh Valuation (or the equivalent) on your property. It can be done over the phone.
If your economy has tanked you will see an increase in premiums, not only because of the investments made with your premium as mentioned earlier but because the odds of your filing a claim go up so drastically. With an increase in economic problems you are more likely to have to file claims for stuff you normally would have paid out of pocket and are more likely to torch the house and file a claim to get the money. That is part of the reason why they want your credit report to sign you up for a policy, actually, to determine how responsible a person you are and the odds that you will be in a situation where you feel like you need to commit insurance fraud.
You neglected to mention pro and college football…
My insurance company as well seems to be deciding the amount allocated for rebuilding isn’t enough. So how was it enough when I bought the place three years ago?
Note, it is not Non-profit, it is a “not FOR profit” organization. Which means it is allowed to make profits and store them up in reserves. A while back, AAA was found to be keeping too much money and had to refund some back…I got around $600 due to that.
Part of it is the simply ridiculous assumption of what it would cost to rebuild my house. They are using a figure in the neighborhood of $170 per square foot. I didn’t pay $170 per square foot for my house back at the top of the bubble, and I got the land it sits on as part of that deal. No standard builder today is going to charge that to rebuild my house.
After I paid off my house - the very year after - my rates went up by more than 15%. When I inquired why I was feeling the wrath of Cornholio on my home insurance even though I had never made a claim, I was told that my credit rating had gone down because I no longer had the loan line of credit for my house.
So I asked “let me fucking get this straight - I do the responsible thing and buy a house I can actually afford, and pay off a 30-year loan in 8 years, and that’s considered risky financial behavior?” and the reply was 'Yes. Yes it is."
So I said I was changing insurance companies, and got a frantic call about 2 hours later saying “Please don’t leave, all is forgiven, we’re keeping your rates the same.” :rolleyes: I should have switched, but it was decent insurance and I was lazy.
Maybe there is even something left over for AAA!