Why Are Insurance Rates So High?

Every year, many people’s insurance premiums rise. This isn’t just car insurance – though of course that’s one of the most applicable types – but other kinds of insurance as well. Homeowners insurance, boat insurance… it doesn’t really matter the specific type. Every year, for many people, their prices rise.

But why, though?

Why is it that these prices rise: even when the insured people didn’t do anything to change their plan? There are a lot of different variables to look at, and we’ll examine them in this article to explain why your insurance rates may be so high.

How Companies Determine Rates

When looking at insurance rates, it’s natural to want to know how companies come to these numbers. Some of them are pretty high, after all, so skepticism makes some sense! But a lot of these figures are far less ridiculous than it may seem once they’re examined more closely.

Car Insurance Rates

To determine why insurance is so high, there are a lot of different factors. For auto insurance, some of the biggest reasons are things like the type of car you drive and how old you are. The price of the car means that if any damage is done to the car, it’s going to be more expensive to repair: that raises the rates right there.

Your age is another big determining factor. Car insurance companies like to see older, more experienced drivers. Drivers who are young – especially below the age of 25 – will face especially high rates due to an increased chance of an accident or other issue occurring.

Some other factors are your driving record, where you live, and what level of coverage you have. All of these can raise your premiums and have you paying more each month.

Homeowners Insurance Rates

These are very straightforward, too, but many people aren’t aware about all of these factors either. Basic things like where you live, how much your home would cost to rebuild, the amount of coverage, and the age and condition of your home are all big parts of how much your homeowners insurance costs. 

Things like your deductible and factors like your home’s security and safety features can also play a big role in terms of determining your premiums.

Of course, there are also discount you can receive in order to reduce the price of insurance. Things like monitored security alarms and smart home alarms affect pricing.

Factors That Can Change Pricing

Of course, there are other outside factors that can also change pricing and premiums. When you ask yourself ‘why is my insurance so high’, there are a few specific issues that can really snag a lot of people:

Changes in Credit Score:

As you may imagine, with big changes in credit score come other changes. Your insurance premiums can be affected by changes in credit score.

Big Influxes or Sudden Insurance Claims:

If you were to make a big change on your insurance or suddenly make a huge claim from an accident or damages, you of course could see big updates to your policy when it comes time to renew. Pay attention to your premiums and the reasons that your insurance company gives for updating the rate.

Changes in Living/Driving Situation:

Changing cars, homes, or where you live can affect insurance drastically. Look into this when making any big life changes so you’re ready for a possible change in price.

For Cars: Traffic Violations

For cars specifically, big traffic violations and issues with your driving record can spike up your insurance rate. Multiple accidents on your driving record also plays a key role in higher pricing. Look into being a safe, defensive driver to try and reduce your rates.

For Homes: Large Damage, Repairs, Maintenance, Improvements

For homes, specifically, large damage, repairs, and big home improvements could also possibly cause changes to your insurance rates.

Why It Can Be Hard to Find a Cheap Plan

The easiest (and most direct) way to explain why insurance is so high and why a cheap plan is so hard to find is because you’re insuring expensive things. Cars can often cost over $20,000 and homes are north of $200,000 on average. While the insurance companies usually don’t need to pay anything out, when they do need to cover something, it’s a truly massive expense.

If you own an expensive vehicle or live in an affluent area while owning your own home, you’re going to pay a significant expense for your insurance. It’s nearly unavoidable – but if you’re determined to reduce your expenses, make certain to control and mitigate every aspect in your power to make certain that your premiums don’t balloon out of control.

Also make certain that you have an insurance company that will notify you ahead of time before big policy updates: nothing feels worse than being locked into a new, higher rate instead of trying to get a better deal.

So, Why are Insurance Rates So High, Exactly?

Now that we’ve reviewed all of this information, the answers should be far more apparent: because things like cars and homes keep going up, that makes it very difficult for rates to stay low. If you add in just a few complicating factors such as an accident or damage to your home, it’s easy to see how rates can stay high, and even continue to rise up further.

If you were looking for a solution to lower your own rates, then consider changing things that affect your premium: like looking at your deductible, or changing the level of coverage that you have. Consider speaking to your insurance company if you feel like you’re paying too much: they may be able to offer some assistance in terms of flexibility with plans from different insurance companies.

Is There Any Other Assistance I Can Receive?

Even while knowing all this information about how they determine insurance rates, the agents that work in the industry are far better experts at this stuff. Working with an independent insurance agent can give you quite a few benefits.

For one, because they’re experienced in the industry, independent insurance agents or agencies can give you all the detailed information to try and get the best rates possible. They can also inform you about specific details of plans you may have not been aware of.

They can shop around for the best plans to save you money: and because they’re so aware of the rules of the industry, so long as they’re kept informed, they can be on the lookout for you so that you have the best insurance experience possible.

If you need assistance with your insurance, consider using www.MyInsuranceGroup.com for further assistance. We offer help with auto insurance and homeowners insurance, and have all the information and assistance on hand to help you with your insurance.