Consumer Education

Common Insurance Questions

What did my premium go up when I haven’t had any claims?

Premiums may have gone up for all insureds in your class. Insurance involves a lot of people sharing the losses of a few people. When, overall, losses go up, your share (in the form of your insurance premium) goes up.

Why did the amount of coverage on my house go up when the value has gone down?

That depends on how you define “value.” If you’re talking about market values which have declined in the current real estate market in the past couple of years, the resale value of your home may be depressed. However, insurance covers the cost to rebuild or replace your home or property. The real estate market has little to do with that. If construction costs rise, your policy limits should increase accordingly.

Do I need to buy the coverage when I rent a car?

We suggest that you purchase the loss damage waiver in case the vehicle is damaged. While most auto insurance extends to rental cars, your policy probably has exclusions that aren’t in the loss damage waiver. Likewise, there are things the loss damage waiver doesn’t cover that your insurance does. Having both makes it less likely that you will have an uncovered loss.

Why did my business liability insurance after 18 years and never had a claim go from $17,000 a year to almost $30,000 a year?

Premiums may have gone up for all insureds in your class. Insurance involves a lot of people sharing the losses of a few people. When, overall, losses go up, your share (in the form of your insurance premium) goes up. In addition, your premium may be based on payroll, sales, or some other factor that has increased substantially. If your business is growing rapidly, your exposure to loss probably is too. Your insurance premium may be reflecting that growth.

Is it true a red sports car costs more to insure than a black sports car (same year, make & model)?

Nope. The color of your car has absolutely nothing to do with the cost of insurance. This myth may be based on the premise that a red sports car is flashier than a black one and might attract the attention of local law enforcement if you’re driving a bit too fast. Getting speeding tickets almost certainly will increase your insurance costs.

Why does my car insurance go up when my car keeps getting older?

The component of your premium that pays for physical damage claims to your car usually goes down with age. However, other coverages like liability might go up. In addition, experience for that model car or for all insured cars in general may be going up so your increase is similar to that being experienced by others insured by your insurance company.

What’s my credit got to do with my insurance?

Statistical studies have demonstrated that loss experience is directly proportional to an insured’s credit score. For that reason, some insurance companies use that as a factor in establishing rates if permitted by law in your state.

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