Why do car insurance jack up rates for existing customers?

[Zeze]

1. Been with Geico for many years. At every 6 mo renewal, price goes up $60-150~ when no tickets / accidents happened.

2, Screw you, thanks to internet, I can just open another window and directly compare. Finally went with Progressive.

3. NOTHING changed. Only one 6-mo term with Progressive, now they're asking for $240 more! LOLWTF. What, I can't search my email and check what I paid mere 6 mo again?

Thieving beeyotch Flo.

4. Typed up Geico again. BETTER policy for $200 less or a whopping $400 less than the current renewal offer by Progressive.

These bastards. Screw you both gecko and Flo.

 

[Imp]

Never owned a car, but I'm trying to get business liability insurance and it's a bitch. Only found two online options to directly quote and buy from. One place is about half the price of the other for general liability, but a broker's given me a ballpark figure way higher than even the more expensive online one.

So, my guess is that they think you won't look or bother to get a better price. Probably true for many people.

 

[Humpy]

Insurance companies are all about playing the odds to maximize profit. They are taking the chance you'll pay the higher price.

Plus they are a bunch of cunts.

 

[highland145]

Well, let me tell you.....S.C. in the state a flood, an ice storm, 7 isis attacks, global warming.....they called me and said I would have an increase. Someone gets to pay for the shit they had to pay...after you already paid. Right?

 

[JEDIYoda]

I have Geico and have never had that issue!!

 

[hardhat]

My guess is that agents get paid for new customers, not continued business. I agree, they are jerks.

 

[Red Squirrel]

Insurance is weird like that. When I first bought my house I just went with whatever company my parents were with just because it was easier then trying to shop around, had tons of other crap to line up too so I just wanted to make a phone call and be done. Was paying $160/mo. I figured, to insure something that is worth 200k, that seems reasonable to me. Never thought about it after.

Years later I hear that through my company we can get a discount through a different insurance company. I call them up for fun. Get this: $40/mo. WTF my other company has been raping me all this time and I did not even realize! I pretty much switched right away lol. It came up to a bit less with the company discount.

Car insurance was not much different though. With the car and the house I now pay about $160, but I was paying that for the house alone with the other company.

Trying to get car insurance when you're under 25 is also quite comical. You'll end up paying more per year than what the car is worth. I kept the car in my dad's name until I turned 25. Now that I'm 30 I wonder if I can get some kind of price break, I should call my insurance and check. Worth trying I suppose.

 

[highland145]

My guess is that agents get paid for new customers, not continued business. I agree, they are jerks.

Actually it appears that the agency owner makes bank on the "products" (stocks/bank accounts). When my current lady (csr) retires, screw my agent.

 

[Imp]

My guess is that agents get paid for new customers, not continued business. I agree, they are jerks.

No idea how that works but I was looking at an actual insurer's site, not a brokers. Clicked on some policy and it advertised a 15% commission to the broker. Now, was that ongoing or a one-time fee?

P.S. The bigger bitch I've found is that some insurance policies make you pay all at once or add an extra fee if you pay monthly. These premiums are not cheap. I can afford to pay the annual but the monthly is easier to swallow.

 

[brianmanahan]

i've programmed software to determine how much exactly to raise your home and auto premiums

it always has to be within a state-regulated limit but that limit can be pretty high per year

especially if you file a claim - then all bets are off!

 

[brianmanahan]

One place is about half the price of the other for general liability, but a broker's given me a ballpark figure way higher than even the more expensive online one.

GL is a tricky one to underwrite. much more nuanced than property and auto which are pretty much a low-margin commodity

 

[brianmanahan]

My guess is that agents get paid for new customers, not continued business. I agree, they are jerks.

correct, the agent commission is usually 5%-10% higher for new business than renewals

 

[Imp]

GL is a tricky one to underwrite. much more nuanced than property and auto which are pretty much a low-margin commodity

It's still cheaper than incorporating, I guess. And for a one-man corporation, I'd be an officer/director and the sole employee, and there's nothing stopping anyone from naming me in a lawsuit so looks like I'd need it either way.

 

[who?]

The renewals are easy money. If they have more expenditures they have to have more income.

 

[BoomerD]

Simple answer...because they can, and most of the time, the insured just pay it.

I'm sure there are all kinds of bullshit actuary answers about increased claim costs for your vehicle...or where you live...and those CAN change periodically, but the biggest reason is simply...because they can.

When we lived in a medium sized town in CA's central valley, (about 40K people at the time) our insurance agent told us the rate was high because of the country roads in the area without stop signs...and the high number of illegal immigrants that caused accidents.

So, when we moved to a small city nearby, (about 150K at the time) we expected the rates to drop...nope. "Oh, you now live in a larger city with more property crime such as stolen cars and vandalism."

We changed insurance companies and got a HUGE drop in premiums for better coverage.

With states mandating auto insurance to license your vehicle, they have a semi-captive audience. It's forced legal gambling. (you're betting your money you won't have an accident against the insurance company's money that you will...and they control the odds of the payout.)

 

[sdifox]

Op doesn't understand how insurance works.

 

[FoBoT]

i always took a price hike to mean "please quit being our customer and seek insurance elsewhere"
just shop for a new company and switch if you can save money. customer loyalty is meaningless to corporations

 

[GagHalfrunt]

It's not that they jack up prices so much for existing customers, it's that they give deep discounts for new customers. After six months your new customer discount expires and you get the "real" rate. If you don't switch after that it only goes up $10-$20 per period. It works because most people don't want the hassle of getting new insurance and many don't even notice, so they pay it.

I've been flopping back and forth between Geico and Progressive for like 8 years now. Every six months I switch and get the new customer rate from one, then six months later I switch back to get the new customer rate from the other, then six months later I go back to the first where I'm magically new customer again.

 

[boomhower]

Just the way they work these days, my guess is they are counting on people being to lazy to switch. Geico did the same thing to me. Switched to Liberty Mutual and they were level for several years. Bought a house and Liberty Mutual had the lowest combo price of all the companies I called. The second year they doubled the price of my house insurance. Then I heard of Amica. Called them and they were less than half price price on the house and cheaper on the cars. They haven't raised my rates a bit in three years. Had one no fault claim and they were a pleasure to work with. Cheap and one of the highest rated companies in the country. Had some coworkers I recommended them to with similar experiences.

 

[ponyo]

Just the way they work these days, my guess is they are counting on people being to lazy to switch. Geico did the same thing to me. Switched to Liberty Mutual and they were level for several years. Bought a house and Liberty Mutual had the lowest combo price of all the companies I called. The second year they doubled the price of my house insurance. Then I heard of Amica. Called them and they were less than half price price on the house and cheaper on the cars. They haven't raised my rates a bit in three years. Had one no fault claim and they were a pleasure to work with. Cheap and one of the highest rated companies in the country. Had some coworkers I recommended them to with similar experiences.

USAA and Amica are rated 1 & 2 as the best insurance companies. I should take my own advice and look into switching to Amica.

 

[lxskllr]

Progressive was always stable for me. I don't remember what I was paying(~$750/year?), but it was always in the ballpark year after year. Might have gone up a couple tens of dollars, but that's not worth pulling a pen out to figure.

 

[ponyo]

Thanks OP and boomhower. I finally stopped being lazy and got quotes from Amica for my home and autos. Amica was about $1,500 cheaper than State Farm who I've been with forever. And that's with additional $1 million umbrella policy which I didn't have with State Farm.

 

[dr150]

Thanks OP and boomhower. I finally stopped being lazy and got quotes from Amica for my home and autos. Amica was about $1,500 cheaper than State Farm who I've been with forever. And that's with additional $1 million umbrella policy which I didn't have with State Farm.

Amica is indeed great compared to the others.