I Had Zero Claims Last Year… Why Is My Insurance Premium Higher?

We do our best to keep you as clients up to date on everything that has been happening in the insurance industry. From lumber rates increasing by 167%, to the Missouri flood, the Safeco premium hike, general industry inflation, and much more. We want you to be as up-to-date as we are with what is going on in the industry.

As of recently, we’ve had quite a few clients reach out to us with the same question. “I had zero claims last year, why is my insurance premium going up?” We’re going to dive into that question in our February Newsletter so let’s get to it!

First of all, it’s important to understand that insurance companies are businesses, and like any business, they need to make a profit. One way they do this is by setting their premiums at a level that allows them to cover their costs and make a profit.

Number of Claims Can Harm You

One of the main factors that affects premiums is the number of claims that are made. The more claims an insurance company receives, the more they have to pay out, which can lead to higher premiums. This is why it’s important to try to avoid making unnecessary claims, as it can help keep your premiums down.

Inflation Affects Premium Too

Inflation is another factor that can cause premiums to increase. As the cost of goods and services rise, insurance companies may have to adjust their premiums to keep up. This is especially true for property and casualty insurance, where the cost of rebuilding or replacing damaged property can be a major factor in determining premiums. 

Remember, lumber itself had an increase of over 167% in 2022 alone. https://www.nahb.org/blog/2022/01/latest-wave-of-rising-lumber-prices-adds-more-than-18600-to-the-price-of-a-new-home/

See our graphic below for other inflation statistics.

Your Risk Level Is a Factor

Another factor that can affect premiums is the level of risk associated with the insurance policy. for example, personal insurance such as car insurance, if you live in a high-risk area or drive a high-performance car, you may be charged higher premiums as a result. Similarly, for business insurance, if the business operates in a high-risk industry or has a history of claims, the premiums may be higher. 

Laws and Natural Disasters Cause Premiums to Skyrocket

There are also other factors that can affect premiums, such as changes in laws and regulations, as well as natural disasters. For example, if a natural disaster occurs and causes significant damage, insurance companies may have to adjust their premiums to account for the increased risk. 

Keep in mind this is a big reason why increases are being taken. Natural disasters such as wildfires, flooding, winter storms, and hurricanes plagued much of 2022. There were a total of 18 weather-related disasters that exceeded a minimum of $1 billion each in the U.S. You can only imagine the amount of money that insurance companies lost.



So, why do insurance premiums seem to go up every year? The simple answer is that they have to. Insurance companies need to make a profit, and in order to do that, they need to set their premiums at a level that allows them to cover their costs and make a profit. And as the number of claims, inflation, level of risk, and other factors continue to rise, insurance companies have no choice but to adjust their premiums to keep up.

But don’t let this news get you down. There are ways to keep your insurance premiums as low as possible. For example, you can try to avoid making unnecessary claims. You can also shop around for the best rates, and consider raising your deductibles to lower your premiums.

In conclusion, insurance premiums may seem to go up every year, but it’s important to remember that it’s a necessary part of the insurance process. Insurance companies need to make a profit and to do that they need to adjust their premiums to cover their costs and make a profit. But there are ways to keep your premiums low, such as avoiding making unnecessary claims, shopping around for the best rates, and raising your deductibles.

Thanks for reading, and as always, stay insured!

Sherry BermanSherry Berman
17:55 08 Dec 22
We just moved over to e3 with Chris Stone, 1 1/2 years ago. Our house flooded during snowmeggedon in Texas last February. The insurance companies were overwhelmed with phone calls from Texas. Our insurance company was not responding to us on a timely basis, and because of the supply chain shortage, we knew we needed to act quickly. Chris knew who to talk to at our insurance company, and was a total advocate for us and made sure that our needs were being taken care of. Our last insurance agent was the advocate for the insurance company, not us. Chris knows the business inside out. He guided us along the process of what to do. e3 represents many different insurance companies, which gives Chris the ability to guide you into the best policy that meets your needs. He explains the insurance lingo in layman terms, and makes sure that you and your family are protected. My husband and I totally trust Chris to give us the best policy with in our budget.
Andy BermanAndy Berman
21:56 07 Dec 22
e3 Insurance and Chris Stone are simply the best!! After experiencing a flood in our house and a total redo necessary, Chris made the experience completely seamless!! There simply is no one better!!
Alex ThipkhosithkunAlex Thipkhosithkun
19:32 03 Nov 22
I can't say enough good things about Chris at e3 Insurance. He really is an expert in his field and was really helpful and thoughtful through my home and car insurance purchasing experience. But it doesn't stop there. Recently, I was facing a relatively stressful plumbing situation with my newly purchased house and after talking to Chris and putting me in contact with the right people, they had someone come out THAT afternoon-- Amazing!
Austin SandozAustin Sandoz
14:45 06 Oct 22
Chris was a client of mine for a long time. When I reached out to get a quote I was blown away. I found out my brand-new 2022 Jeep was severely underinsured and I had little to no protection for my assets.After comparing my old policy side by side with my new policy he was able to quadruple my coverage and protect my assets for LESS than what I was paying before. When it's done right, it's done right.
Sheryl KlousiaSheryl Klousia
14:29 06 Mar 22
Chris has been extremely helpful in finding us great policies for house and car insurance. He reviews our policy yearly to ensure we are getting the best rate and best coverage… and recommends changing when needed. We are very satisfied with his service… he has saved us so much over the 3 years that we have been with him ! So glad we found him. Our kids all use his services also !

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