Two of the major insurance providers in America are raising their home insurance rates 20-50%. Rate increases or decreases are based on how well the company is able to manage losses and expenses. A company with higher losses or expenses may be required to increase rates, while a company with lower losses or expenses may be able to lower their rates. So, while your lack of claims may contribute to the company’s bottom line, it is the company’s entire line of business that will determine whether rates go up or down.
Most states require insurance rates to be approved by a state insurance regulator. While this varies by state, companies are not allowed to charge rates that generate excessive profits. Your state insurance regulator determines what a company is allowed to make as profit, and will adjust their rates accordingly.
Companies use inspections to ensure customers are properly insured and charged what they deem to be a fair premium. Inspections can uncover valuable credits, incorrect coverage values, or liability exposures that you may have been unaware of. You have the right to question any change to your policy as the result of an inspection and have your insurance provider explain it to you fully.
If your insurance rates have dramatically increased over the years, it may be time for a change. Many people have been with the same insurance provider for over 15 years, thinking they’re getting the best rate and the best coverage, only to discover the policy they’ve been paying on for $4,000 per year can actually be reduced to to under $2000 a year, with no reduction in benefits. Keep in mind that the best insurance is valued by the customer service you will receive, especially when you have a claim, and not who has the cheapest rate. In the unfortunate event you have a claim, you want the company with a great reputation for customer service and fairness. Additionally, meet with your agent to be sure you are getting all the discounts you are entitled to, that you understand what your policy covers, and to make sure you are adequately insured.