If you are with a reputable carrier, the rates you will pay over a 20 year period will probably be on par with most other reputable carriers over the same period. I personally believe the deciding factor in choosing your insurance agent should come down to the service you get. Do they answer the phone, do they call you back when they say the will, do they make more mistakes than you are willing to deal with and probably most important, can and do they pay claims?
In spite of this, it certainly doesn't hurt to call your insurance agent every couple of years to ask about a better rate on your insurance. From time to time, most insurance companies get new rating platforms and must "file" these with the Texas Department of Insurance. The reason they do this is because they may have a found a new rating factor (or see a new rating factor another company has introduced) which will give them a more accurate and profitable rating experience…the TDI must approve all rates. So if you bought a policy from carrier ABC in 2009, that company is probably offering different rates for new customers. Sometimes that rate is lower and sometimes it is higher.
AUTO INSURANCE
I often get the auto insurance rate question, "Why do my rates go up on my car if it is a depreciating asset? It is worth less today than it was 2 years ago, so why am I paying more for car insurance?" It is a fair and reasonable question. Your rates go up because the money an insurance company has to pay for the replacement of parts is probably higher than it was in years past. As a result, body shops charge insurance companies more for repairs and your insurance carrier is passing that cost off to you.
HOME INSURANCE
Home insurance rates change as well. I have seen less of an overall change in rate over the past 15 years in home insurance than most other types. (Life insurance is an exception…mortality rates, which are the actuarial tables life insurance rates are based on, are changing. We are all living longer and life insurance rates have stabilized for the most part.) Home insurance rates can increase in any one year and go back down a few years later. The driving forces in home insurance rates are weather related claims and conversely homes that are built to withstand that weather. I could blog ad nauseam about this but a few quick thoughts…here in Austin, Central and North Texas we get a lot of hail. Hail absolutely devastates a loss ratio (percentage of claims paid to premiums brought in). Roofs can be anywhere from 5k to 100k to replace. When the average home insurance premium in Texas is $750 a year (don’t quote me on that and no pun intended) you can imagine how long it takes to recoup premiums. Also, in a year after a major storm you can most definitely expect to see a rate increase. Roofs are getting stronger and overall construction is getting better so that homes are able to withstand more than they used to. If we get a have a few years of favorable weather you can be optimistic about your insurance rate decreasing.
SUMMARY
These are some quick answers to the insurance rate increase question which is by no means complete. There are many factors that drive your insurance rate and you should be able to talk to your agent about other factors that are contributing to your specific rate. If you find yourself questioning your agent on everything you might ask yourself if you trust your agent or not. If you don’t trust your insurance advisor you should seek council elsewhere. You do have a choice when it comes to your insurance…pick someone you like. I’ll be glad to talk to anyone who needs insurance in Texas!
Josh Lewis
512-441-2763
