I just switched car insurances, but I’m curious why it had gone up so high in the last three years. We have a 2000 model vehicle, bought new in January 2000 (whoo hoo! 3 more payments!). Full insurance, of course. At the time, insurance was $900/year. We’re near thirty years old, have had no accidents or tickets, but our most recent insurance rate was $1500/year! In 3 years, we had a 66% increase in our insurance rate! I can’t imagine what it would’ve been if we’d had any tickets or accidents.
The type of car can make a big difference - if it’s gone up on the “most stolen cars” list, that may increase it.
Why not call your insurer and ask? I’d think they could tell you why your rates are what they are and whether there’s any way to bring them down.
What insurance company do you use?
StG
StG, it was AIG. Now it’s GEICO (or will be in about two months when the new coverage goes into effect).
First, I would call the insurance agent & ask, if you want cheaper insurance, you can ask for that too. That way they can also let you know what you are paying for. I talked to mine & asked for a list of things that I was paying for & I told him I didn’t need it all, so he took some off & the rate went down.
Also, when you say ‘we are’ that seems to mean there is more than one person, so doesn’t that mean higher rates?
Yeah, but we’ve been married for 8 years. It’s not like we suddenly sprang a second person on them. My point was that for no discernible reasons, our insurance went up 66% over the course of three years.
The reason I didn’t bother to call (and I did consider it) before switching was because I figured if they wanted my business, they’d work to keep it, not the other way around. It took me twenty minutes to switch insurance companies because they were greedy.
The insurance companies have started relying heavily on credit reports as a determining factor in what “tier” to place you in. A second person on a policy won’t raise the rate unless the second person has tickets/accidents.
Having current insurance when applying for a new policy can result in a huge discount. Make sure Geico knows that you have had continuous insurance. Being married and a homeowner will also get you a discount. Also, make sure that you are being credited for any safety features on your car (ABC, Airbags, Daytime Running Lights or Alarm)
Otherwise, I’d have to say that your state has approved several insurance rate hikes over the past few years. This is the case in my state of New York.
There are several things I have to say on this subject. I work in an insurance office and I hear this question repeatedly. I also have some advice for you, if you want it!
Okay, first of all having 2 people on your insurance policy instead of 1 doesn’t make the cost higher. If one of you had a bad record, that could make it higher, but just having 2 people makes no difference at all.
Second of all, a lot of companies have been taking increases in their rates because of the claims that we’ve had. I know the company I work for had several losses in all the hail storms, and other weird weather that went on in the last couple years. Also anyone who makes a fraudulent claim is making your insurance higher. When a friend brags about getting more $$ for a claim than he deserved, you should be mad. That guy is making your rates higher. Same with people who sue for enormous, unreasonable settlements. Those people are making everyone’s insurance higher.
ALSO, you should call your current agent and talk with him/her about what can be done to decrease your rates. In order to keep your business I’m sure he/she would be willing to look over your policy and see if there’s anything that can be done to get your rates down. On that same note, you should make sure that Geico is quoting you the EXACT SAME insurance limits and deductibles that you have now. In order to keep their quotes cheaper, some companies do not ask too much about your previous coverages so they quote you state minimum liability, and high deductibles.
Also, you might consider having your homeowner or renter’s policy at the same place that you have your auto insurance. This often will make your rates go down. I know my company has a REALLY GOOD discount for that.
Another tip: Make sure that the only people that are listed on your auto policy are people that are actually driving the vehicle. On occasion, some report that my company runs to make sure that our insured’s aren’t hiding “young drivers” from us (people don’t like the rates for a 16-year-old kid, so they neglect to tell you that they have one driving their cars) will cause a person to be added to the policy when they honestly aren’t in the household. Once or twice a “young driver” has been added to someone’s policy and they really have no idea who the “young driver” is. If they didn’t call the office about it, they would either pay rates that are too high, or they would switch their insurance to a cheaper carrier with out realizing what went wrong.
As far as your insurance company working to keep your rates down: In the small office that I work in, there are 2,920 policies that we service. Do you have any idea how many extra people would have to be hired to make sure that the price was staying as cheap as possible on each and every one of those policies?? haha It would be too much work to be done.
I know I might have a slightly un-popular opinion on this insurance stuff. Let it be known that I also hate to pay my insurance, and I still get ticked off when the rates go up. I just want to make sure that you aren’t getting screwed by Geico. I’ve heard several bad things about them in the 4 years I’ve worked in the insurance industry.
I guess it should also be stated that I work in an office in Missouri. There are different laws in every states regarding insurance… Anyway, I’d be happy to try and answer anyone’s questions on insurance if I can!
:)
Hope that all makes sense.
I live in Massachusetts, which seems to be an oddity in Auto Insurance Land,* so take all of this with a grain of salt.
Sometimes, the order of drivers on a policy can affect the premium. Mass. has Primary and Other drivers, and Ontario has Primary, Secondary, and Other drivers. This definitely makes a difference if the drivers have different histories (i.e., accidents and tickets), but perhaps also for gender.
The state-required minimum coverage levels can be different from the company-suggested levels. When I switched the order of drivers on my policy recently, they automatically readjusted my coverage levels – to a much higher level than I needed or wanted. Reviewing your coverage, and the required minimums, could be in order.
*In MA, auto insurance is regulated by the state such that everyone pays exactly the same amount in each category. The amount you pay depends on the standard factors such as history, risk, deductibles, vehicle class, coverage level, etc. but it cannot vary from company to company. I don’t understand why this is, or if it benefits me as a consumer, or why different insurance companies exist in MA. Hopefully someone else can come along and explain this, perhaps in a different thread.
I live in Massachusetts, which seems to be an oddity in Auto Insurance Land,* so take all of this with a grain of salt.
Sometimes, the order of drivers on a policy can affect the premium. Mass. has Primary and Other drivers, and Ontario has Primary, Secondary, and Other drivers. This definitely makes a difference if the drivers have different histories (i.e., accidents and tickets), but perhaps also for gender.
The state-required minimum coverage levels can be different from the company-suggested levels. When I switched the order of drivers on my policy recently, they automatically readjusted my coverage levels – to a much higher level than I needed or wanted. Reviewing your coverage, and the required minimums, could be in order.
*In MA, auto insurance is regulated by the state such that everyone pays exactly the same amount in each category. The amount you pay depends on the standard factors such as history, risk, deductibles, vehicle class, coverage level, etc. but it cannot vary from company to company. I don’t understand why this is, or if it benefits me as a consumer, or why different insurance companies exist in MA. Hopefully someone else can come along and explain this, perhaps in a different thread.
Funny you should mention this. I just got my credit report in today. My credit rating is very good and my personal credit score is in the top 10% of the U.S. population. In other words, they certainly couldn’t have used that against me.
Thanks for your advice, Breezy. I did select options that matched my current insurance, since I had it right there in front of me, so I’ll be getting identical coverage for $500 cheaper than AIG wanted. I hope GEICO turns out to be okay. I’m pretty pig-headed about fighting for what’s mine when it comes to people like that. The last time we had to deal with insurance, we had to fight the guy tooth and nail to get the amount of money our vehicle was worth, faxing him tons of documents to prove that his initial sum was ridiculously low. He ended up actually giving us slightly more than we were demanding. I have to wonder if he’s still scratching his head on that one.
I would have to say that your insurance is going up because of rate increases. You say you both have a good driving record, no accidents, you’re in your 30’s and married… that seems to be the only reasonable explanation that I can see. Have you moved within the last three years? The rates may vary according to where the vehicle is located/garaged. If you moved to a larger more populated area your rates might increase slightly because you’re more likely to get in an accident in a more populated area. I would definitely call your agent and ask why your rates are so high… they will be able to look at everything on your policy and tell you. Also, as Breezy said, having your Homeowners/Renters policy with the same company will usually get you a multiple policy discount.
I can give you three reasons your rates are high, none of which have anything to do with your specific insurance situation.
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The auto insurance market went through a period of very heavy competition in the 90’s. Companies were underpricing their auto products in order to attract auto business because auto insurance is more profitable than home insurance. (The company I work for will not insure your home unless they also insure your auto.) Two or three years ago the rates bottomed out and the companies could no longer afford to keep auto rates as low as they were. The market started hardening, rates began to increase industry-wide, and they haven’t topped out yet.
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Insurance companies invest the premiums they collect. In the 90’s they were able to make enough money on investments to offer lower premiums. When the stock market took a dive so did their investment revenue.
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Insurance companies have to buy insurance to cover themselves against catastrophic losses. This is called reinsurance. In the same way that personal insurance is designed to spread the risk of loss for people like you and I, reinsurance spreads the risk among insurance companies. When an ultra-catastrophic loss (World Trade Center, nasty hurricane) occurs, the premiums that the insurance companies pay for reinsurance rise. In the case of the World Trade Center, dramatically. I believe my company’s reinsurance premium went up more than 30% this year. That’s a big chunk of change.
So, even though you’ve done nothing to cause your premiums to go up, they still go up. Insurance is a cyclical business and eventually they’ll go back down again. So shop around for the best deal you can get, but you’re still going to be paying much higher rates than you’re used to because that’s the way the market is right now. I second the suggestion to place your auto and home insurance (if you own a home) with the same company. Also consider higher deductibles on comp and collision.
All excellent points and I’ll add one more: if your jurisdiction doesn’t heavily regulate auto insurance, you’re may be paying more because of the states that do. States like New Jersey, New York, and California have created bizarro markets where it’s almost impossible for insurance companies to make money - rate caps, mandatory bad-driver pools, etc. Having represented a small New Jersey auto insurer, I can also tell you that high-regulation states also try to make it very difficult for companies to leave their markets. The insurers find themselves stuck, and confronting all of the issues AllShookDown (great screen name, BTW) mentioned. They’ve gotta make money somehow, so it comes out of the hides of people in Kentucky or Georgia or Wyoming.
Nobody has mentioned yet what we were told by our insurers in early 2002: The terrorist attacks on September 11 caused catastrophic losses within the reinsurance market. This, in turn, was passed along to primary insurers, which was then passed along to our clients.
I worked in the insurance industry for 13 years. I can not offer any explainations for why your specific policy is so high, but I will tell you that because of the terrorist attacks, every policy I serviced had a minimum 10% rate increase within the 2001-2002 fiscal year.
Seriously? For cars? What a ripoff. That 10% has to be pure profit. I can’t imagine that there would be significant losses due to terrorist attacks. I would love to be able to reinsure that 10%.
galen, I assume you mean “no significant losses to motor vehicles” since there were obviously significant losses in the September 11th attacks. Your point seems to be (please correct me if I’ve misunderstood) that since motor vehicle losses were an insignificant percentage of total losses, the cost of increased reinsurance rates shouldn’t be passes along to auto insurance buyers. That would be nice but it doesn’t work that way. Just because a company makes 10% more on auto insurance it doesn’t mean it’s a profit.
The company I work for had few, if any, losses directly related to the attacks. Using the above reasoning our reinsurance rates shouldn’t rise at all. But the whole point of insurance and reinsurance is to spread the risk so that no one person, business or insurance company is financially destoyed. In other words, a major catastrophe like September 11th doesn’t put a company that did have significant losses out of business. Therefore, reinsurance rates go up for all companies.
So what’s a company to do? Suck it up and pay the increased reinsurance rates out of the goodness of its heart? No, it’s a business not a charity. They’re going to raise rates to cover the increased cost of reinsurance. So which rates should be raised? Commercial rates only since the majority of property losses incurred at WTC were to businesses? Let’s see…commercial rates are raised enormously to bear the entire cost and all of our commercial customers place their business elsewhere or (if every company does the same thing) are simply unable to afford the cost of insurance at all. A bad idea that probably wouldn’t be approved by the insurance regulators in any state anyway. A more viable solution is to spread the cost among all insureds so that no single insured takes too big of a hit.
Insurance seems to be a very misunderstood industry. The companies I’ve worked for typically make pennies on the dollar, if that. In a very, very rare excellent year…seven cents. An ok year three cents and not all years are even ok years. It’s not uncommon to lose money on the actual insuring part and only make money on the investing part. Last year we lost big-time on both. I’ve been told that companies like GEICO exist purely to gather money to be used for investing. In my experience, insurance companies are not the huge moneymakers a lot of people think they are.
OxyMoron, thanks for the compliment on the screen name. I’d like to take credit for thinking it up but I swiped it from an album/song by The Replacements.
Thank heaven for you, All Shook Down. I wouldn’t have explained it nearly as well. Plus, being that I worked in the Canadian insurance industry, I’m always afraid of giving information that isn’t going to necessarily be correct for the American market.