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On any given day, we receive about a half dozen phone calls asking why their auto insurance renewal premium went up again. Though this is very frustrating to us all (and that includes me because I don’t receive a magical special deal just because I am an insurance agent), there are actually legitimate reasons for consecutive rate increases.

Technology

            By far the biggest reason why your car insurance rate has gone up is due to all of the technology embedded in newer cars these days. A rear bumper may have a backup camera, sensors, and a crumple zone. In the “olden” days, a busted up bumper could be removed by unscrewing a couple of bolts and easily be replaced for a couple of hundred dollars. Now, what used to cost hundreds costs thousands to fix or replace.

            Have you seen some of the fancy new windshields? By law, today’s windshields are laminated using a polyvinyl butyral film sandwiched between two pieces of tempered glass which absorbs mostly all of the sun’s UV rays keeping the interior of the car in good shape longer. Windshields today are stronger and don’t shatter into jagged shards like they did years ago. Some sophisticated windshields have rain sensors that automatically turn on your windshield wipers (if only they could come up with something to turn on turn signals). I drove a new Camaro at the San Diego Car Show a couple of years ago and the windshield had a “heads-up” display which showed me the speed of the car without me having to take my eyes off of the road among other information. Personally, I didn’t like this feature because I found myself staring at the number that than the road! There are many other windshield features currently in use or being invented but the bottom line is that all of the new technology, though fun to play with costs a lot of money and drives up the insurance company’s cost to repair the car or replace the car in the event of a total loss.

My rate went up once already. Why did it go up again?

word on paper says car insurance with calculator and two toy cars

            Those who are skeptical will say that the insurance company raises their rate a little bit at a time in order to not lose business. “Maybe the customer won’t notice these small increases”. Again, there is a good reason that the insurance companies operate this way.

California law states that if a company raises its rate by 7% or higher, consumer advocate groups can request hearings which can be long and drawn out as every piece of rating data is scrutinized. And the insurance companies must bear the cost of the hearings which runs into the Millions of dollars. That is why 99% of all rate filing requests are 6.9% or lower. These requests take months and sometimes years to be approved so as soon as that happens, it is not unusual for a company to ask for another rate increase until the rates are sufficient for them not to lose money.

One last thing to note is that it’s not just a few insurance companies asking for rate increases. Companies across the board have asked for multiple increases because it costs so much more to repair or replace damaged vehicles.

How can I keep my rates down?

            There are a number of ways to accomplish this without lowering your coverage or going without insurance:

·        Ask your agent how much you would save by raising your deductibles.

·        Does your agent shop your insurance when it is close to renewal? We do among many different companies.

·        Does your agent offer a policy review?

·        Are you paying extra in finance fees? Has your agent discussed the benefit of being set up on automatic payments?

·        Have you asked your agent about the cost benefits of bundling two or more of your insurance policies?

It’s your agent’s job to recommend proper coverage at a fair rate to protect your assets, you, and your family.  If you would like to discuss your insurance needs with our office please call (760) 893-8055 or via email.

--Ken May

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