Bagley Insurance: Service, Value & Education For All Your Insurance Needs

Stay out of my pool!

I’ve been talking to a lot of people lately who are upset that their home or auto insurance rates have gone up when their insurance renews. Often times they have recently filed a claim, been in an accident, or gotten a speeding ticket. They are upset with the insurance company and don’t think it’s fair for them to be charged more money after filing a claim or getting a ticket. I’d like to explain why insurance companies do this, and also give some of my thoughts on why this is, in fact, the fairest method for insurance companies to calculate premiums.

There is no guarantee that your prices will increase when you file a claim, but there is a good chance that they will. There is also a good chance that the insurance company will decide not to renew your policy if you file too many claims. Some insurance companies are more lenient then others, but in general, if you file a lot of claims or get a lot of tickets, you are going to end up paying more for your insurance.

Insurance, in general, works as a pool of risk. Everyone puts money into the pool, and when someone needs help covering a covered loss, they are able to take money from the pool to recoup some of their losses. In order for insurance companies to be profitable (and afford to stay afloat and cover losses), they need to have underwriting guidelines to determine if a risk is acceptable for their pool, and how much they should charge that risk to take part in the pool.

As someone who has not filed any claims and drives the speed limit, I would be upset if I paid the same amount of insurance costs as someone who has filed many claims and gets ticketed frequently. In fact, I would rather be in a pool with other low-risk, safe drivers like myself and have the higher-risk drivers in a separate pool altogether. That would allow the insurance company to charge less in overall premiums and charge me less because of my driving and claims history. That sounds fair to me. There are companies and plans out there for everyone. However, for insurance companies to be the most efficient, it makes sense for drivers with similar histories to be in the same pools. If someone is able to go a few years with less tickets, accidents, and claims, then they are free to find a better pool and pay less in insurance costs.

Bear River Mutual is known for its strict underwriting guidelines and low insurance costs. Most people don’t qualify to be insured through them. Those that do, however, enjoy cheaper insurance premiums, and their premiums generally stay level, or even reduce, over time if their customers continue to drive safe and minimize their claim filings.

As an insurance agent, I would never dissuade someone from filing a claim. They have the right, as insurance customers, to take from the pool when they see fit. I would also never judge someone for how they drive or how many tickets they’ve gotten in the past. However, it is my job to explain to my customers how insurance companies work, and why it may be in their best interest not to file a claim if they can pay the costs out-of-pocket. The more you take from the pool, the more you should pay. That is the only fair way to do it, in my opinion.

If you have any other ideas about how insurance companies could calculate insurance premiums, or something that you think might be more fair for everyone, I’d love to hear your comments…

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