There is no denying that there are rising costs all around us. The gas prices have increased significantly and we've all been feeling the pain of inflation when purchasing groceries every week.
As renewals of insurance are coming around, and if you start shopping, you may notice that insurance premiums are also more expensive than your remember them being. We're here to help you understand how inflation impacts your policy premiums and why these costs are no exception.
But first, to help you better understand why costs are rising, it's helpful to know what factors into policy premiums in the first place. Your policy premiums are calculated based on a number of risk factors including your credit history, driving record, age, gender, and so on. Another portion of this is based on the estimated cost to pay out claims every year. Insurance is a transfer of risk from you to the insurance company, so you pay a smaller amount every year to the insurance company, and the insurance company takes on the risk of needing to repair your assets that are covered. The premiums paid into the insurance company are what are used to pay out these claims so when claims cost more, more premium must be paid.
Now to be more specific, here are a list of things that are costing more these days and therefore causing the cost of claim payouts to go up:
Vehicle values are higher. If your vehicle is totaled, the value of your vehicle is now higher than it was before.
Car parts are more expensive. The cost to repair vehicles is more now.
Rental cars are more expensive. When your vehicle is being repaired, the cost to the insurance company to provide a rental car is more expensive.
Attorney fees are higher. The cost to settle litigation associated with claims are increasing.
The best way to keep your premiums low and keep the coverage you need is to make sure you receive every discount available to you. Always consider bundling your home and auto insurance. Allstate also offers Drivewise, a performance based app that will track your driving habits and reward you with discounts and policy credits for safe driving behavior. Set up automatic payments if a discount is associated with it and make sure you have all bills and policy documents set to paperless settings, and if you can, consider paying your policy premium in full instead of monthly. Most companies will offer significant discounts for doing so.
If you feel like you're still paying too much, we would be happy to see what we can do for you and see if we can find you some savings in a time where every penny counts. Give us a call at (602)337-2723 or click the button below to request a quote from our office.