We've all been there, right? The homeowner or auto insurance renewal comes in the mail, and it is higher than last year. Maybe significantly higher. It's infuriating and it often seems unwarranted or at the very least unfair.
I won't bore you with paragraph after paragraph of actuarial science regarding the statistical analysis of risk. But a little bit of understanding about how your insurance rates are calculated goes a long way. I try to think of it like this, with absolute honesty- would I be scared to insure me? Outside looking in, probably not. But there are patterns of behavior, habits, quirks, and undeniable truths that factor into the cost to insure. And that's what none of us sees when we look at the bottom line of our insurance invoice.
A few years ago, I took a big family vacation to the American West. My husband, children, and I along with both sets of our parents set out on a grand tour of several National Parks. We landed in Salt Lake City, rented two vans, and set out on our way. We had 12 days of once in a lifetime vistas and adventure ahead of us... and then we stopped for lunch.
We had a lovely lunch and ventured back out to the parking lot with full bellies. We had two vans when we went to lunch, but only one was left... next to a pile of broken glass.
The short version of the story is that our rental car and every last thing our family brought on vacation was gone. We had the clothes we were wearing and phones (without chargers) and my husband's wallet. Think for a moment about what you take on vacation. Your favorite... everything. Your comfiest shoes, softest hoodie, ride or die earrings- and don't get me started on undergarments. You take your best camera equipment, your new drone, your kids bring all their favorite toys and that stuffy they can't sleep without. You even bring the keys to your car (that is waiting for you in long term parking back at the BWI airport) and the ID that will make a return flight possible. All of it- gone.
My homeowner policy had a limit of $185,000 in coverage for personal property. The limit for "off-site" coverage is 10% or, $18,500. Since Salt Lake City is most definitely off-site, I was able to recuperate my losses. But it was a razor thin margin! Pay attention to your coverages and make sure they meet the value of your property! That's a lesson for another post.
Here's the moral of the story- we are not what you'd call “high risk”. My family is living a boring, normal life. We aren’t swimming in jewelry, expensive electronics or priceless antiques. But we love to travel. And with travel comes risk. It's unrealistic of me to expect my insurer to pay out nearly $50,000 in home and auto claims (don't forget about the rental car they had to replace) and expect my premium not to go up as a result. Was the claim my fault? No. But have I proven myself to be a higher risk than originally thought? Yes.
The more exposure you have, more risk you present. More people living in your home- more risk. More people driving cars- more risk. Cars with more horsepower- more risk. Trucks that weigh two tons- more risk. Dogs, pools, trampolines- more risk. Teen boy drivers that call you "Bruh" instead of mom- MUCH MORE RISK.
The way insurance premiums are calculated is complicated. And, in certain seasons of life your exposures are inevitably higher than others. I'm not planning to give up traveling. In fact, I wish I could travel more. And goodness knows having two teen boys doesn't lower anyone's risk.
That said, try to review your exposures and plan accordingly. We're here to answer all your questions and make sure you are receiving every possible discount available to you. The remedy for high rates is rarely cutting coverages. We want to help. Give us a call.
(Side note, if you're in Salt Lake City, eat at The Red Iguana, but get it to go... and leave someone formidable in the car. Also, get the pumpkin mole- it's delectable.)