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Why Companies Change Insurance Rates

Why Companies Change Insurance Rates

Auto - Buying and Insurance

Why Companies Change Insurance Rates

If you have an accident or file a claim, your insurance rates will often go up. But sometimes rates can go up significantly even if you don't have an accident. Or one company's rates may suddenly be much lower for the same driver and car compared to another company's. Why?

Sometimes rates change due to an auto insurance company's recent claims experience. If the company experiences a relatively high rate of claims and the amount of money it is required to pay to policy holders goes up dramatically, its financial results are negatively impacted. To offset losses (or lower profits) the company may need to raise rates across the board. On the other hand, solid financial results may allow the insurance company to lower rates, maintain decent financial results, and bring in new customers that help grow the business.

That's why you should always shop around – you may find you can get the same coverage for hundreds of dollars less per year.

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