Auto Insurance Question

[DatumPoint5]

There are two "views" of a customer's experience from an insurance company's viewpoint.

One - your clean, no accident, no ticket experience should be rewarded.

Two - you have had many years without incident and you are "bound to have an incident/accident".

They start out pricing your coverage as "number one" when you switch to them initially.

Then, they immediately "start the clock" and price you on number two over the next several years.

It is Unfortunate, but, I believe this all is true.

[Mr._Graybeard]

We've been with Erie (home, auto, umbrella) through an independent agent for the last six years. So far we've seen minimal premium increases, like a couple of dollars a year.

We haven't filed a claim, but the company has a good rep for service.

They don't operate in every state, but I believe their policies are available in Illinois.

[scrabbler1]

Quote:

Originally Posted by DatumPoint5 There are two "views" of a customer's experience from an insurance company's viewpoint. One - your clean, no accident, no ticket experience should be rewarded. Two - you have had many years without incident and you are "bound to have an incident/accident". They start out pricing your coverage as "number one" when you switch to them initially. Then, they immediately "start the clock" and price you on number two over the next several years. It is Unfortunate, but, I believe this all is true.

From my 23 years of working in the actuarial field, specializing in personal auto insurance, I can tell you that both items are true and are always reflected in the rates the insurance companies charge.

One of the secondary class rating elements is the driver record, consisting of accidents and some moving violations (the insurance company has some discretion about what that is). Drivers with more of these driver record "points" will pay more than drivers with fewer or zero points. Some companies allow discounts for their insureds who have long periods of being clean risks with them.

Insurance involves pooling a bunch of risks in order to spread it out among everyone in the pool. Even in a large pool of drivers with clean records, some of them will have an accident and the insurance company will have to pay out money to them or on their behalf. This is priced into the rate that every driver pays, even if he remains a clean risk.

[CoolRich59]

Quote:

Originally Posted by scrabbler1 Insurance involves pooling a bunch of risks in order to spread it out among everyone in the pool. Even in a large pool of drivers with clean records, some of them will have an accident and the insurance company will have to pay out money to them or on their behalf. This is priced into the rate that every driver pays, even if he remains a clean risk.

I get that, but it does not seem to work that way in practice.

Instead it seems that if you have a claim, they raise your rates because you're a higher risk. And, even if you don't have any claims, they raise your rates because they need to spread the risk of other claims across the insured base.

But, I have yet to have an insurer call me and say: You haven't had any claims in xx years of driving. We'd like to reduce your rates.

[GrayHare]

Quote:

Originally Posted by Bir48die Anyway I start the searching process and did the Geico, Progressive and Amica quotes. The first two are literally half of current premiums. The last saves us $800/yr or more just on the auto piece.

Keep in mind the low-ball first year, increasing-rate game is played by most insurers. If you jump ship, then later go back to the previous insurer they will not raise your rates by as much subsequently because they know you're a ship jumper.

[kgtest]

I need to look at switching. Been with SF forever. I wasn't happy when they added an accident surcharge after filing a glass claim a while back.


$985 to insure a 2013 Camry that drives 25k/yr
$1057 to insure a 2014 Silverado
$1660 for Home Insurance on 1990 two story.



I like how it only costs me $72 more to insure a vehicle that costs 2x to replace.


I feel like the biggest factor is probably miles driven/year next to prior accidents/points.


If you drive low miles and have zero points, it would be easy to shop around.



My wife has been driving 3 years now at like 25k mi/year. You would think experience would account for something.



I used to validate the rate sheet changes for an auto insurer years ago. I think there were sometimes over 100 different variables that went into the rates. It all started with the zip code the driver drives in though.

[scrabbler1]

Quote:

Originally Posted by CoolRich59 I get that, but it does not seem to work that way in practice. Instead it seems that if you have a claim, they raise your rates because you're a higher risk. And, even if you don't have any claims, they raise your rates because they need to spread the risk of other claims across the insured base. But, I have yet to have an insurer call me and say: You haven't had any claims in xx years of driving. We'd like to reduce your rates.

In my years in the industry, we often filed for rate decreases when the projected losses were smaller than the projected premiums. With my previous car, the one I owned from 1992-2007, sometimes my overall rates went down, sometimes they went up. The Comp and Collision rates went down as the car aged, sometimes offsetting all increases in No-Fault and Liability. In my current car, there has been a general increase, mainly because Comp and Collision have not gone down much as the car aged, while No-Fault and Liability have gone up.

My insurance company has discounts which rise as I stay clean and with them over the years, once introducing an additional longevity discount which helped to offset other increases.

[Rustward]

Has anyone bothered to compare this "rate creep" to inflation?

[scrabbler1]

Quote:

Originally Posted by Rustward Has anyone bothered to compare this "rate creep" to inflation?

Inflation is one of many factors which influence auto insurance rates. It does put upward pressure on rates, for sure. But that upward pressure can be offset by factors which put downward pressure on rates, such as a car's declining book value, the aging population, technology improvements, and auto safety improvements.