This is a question I get once in awhile. “Why did my insurance go up, I have never even filed a claim?!”.  When you have a true understanding on the mechanics behind how insurance works, I think you will see why rate increases occur.

When insurance is needed, it is used to pay for dozens of different things.  It pays for medical bills, it pays to rebuild homes, it pays to replace property, it pays for lost rental income, it pays for a rental car if you need it, it pays for a towing company to help you out, it pays for lost wages if an employee is hurt on the job, to name a few.  Insurance isn’t a stand alone product.  It’s pricing is determined by the cost of other goods and services and all of these services, have increased in cost in the past few years and will continue to do so.

The average cost of a new car in 2016 is over $33,000.  Every time there is a fender bender and a bumper has to be replaced you are looking at at least $1500.  There are sensors and cameras in every car these days,  so it’s not like they are taking an old bumper off and slapping on a new one.

The cost of medical has increased over the past 10 years so when you are in an accident and there are injuries, it’s the insurance from the at fault driver who pays those medical bills.  These are a couple of factors that cause rate increases.  Check out the short podcast below for more!

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Music by Roger Clyne and the Peacemakers

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