What determines Insurance Pricing

Aug 6th, 2018

I spent some time over the weekend touring a local museum with my 9 year old son. When we came across an exhibit on coal mining in early Appalachia, I became fascinated by the photo’s. My mind became fixated on the work ethic of those men and their willingness to perform dangerous jobs in order to provide for their families. Quickly my mind raced back into it’s risk analysis mode and the difficulty this gentleman and his business would face acquiring insurance in 2018. That’s when it dawned on me that most people really don’t know what causes insurance rates to differ.

If you don’t know where to look, finding affordable insurance can be both difficult and costly. Which is why having an experienced agent with access to multiple carriers, is your best option. Nearly every customer who calls an insurance agent and provides them with all of the necessary information for a quote will save time and create leverage. Those are two very important assets in the quoting process

Five basic reasons why some premiums are higher than others:

1. The type of exposure you are requesting insurance on will dictate the pricing. For example a Shark Diving Tourism company is going to be more expensive than a Floral Shop. This same concept applies across all lines of insurance.

2. If an individual or business has a history of filing claims in the past they can expect their premiums will be higher than those who have not. I have yet to run across an insurance company who just say’ “that’s cool, we won’t count that one”

3. In some states companies & individuals who have had financial difficulties in the past can expect to see higher premiums compared to those who have not. Bankruptcies, liens and judgement could be used as rating variables depending on the state and the carrier.

4. Experience is often used as a rating variable. For example, a recently licensed 16 year old driver is going to cost more to insure than a 35 year old driver. The same concept applies to the number of years a company has been been in business or insured with one company.

5. Your insurance agent could also be costing you hundreds and possibly thousands on your insurance. Believe it or not insurance agents are actually human and they sometimes miss things. Whether its applying every possible discount to a personal lines policy or asking for pricing credits on commercial policies.

If interested I’m offering everybody who took the time to read this a FREE comparison quote from multiple carriers.
Simply send me an email saying you read this blog and would like a quote sales@vfsknox.com

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