Sometimes rate increases have nothing to do with you personally.

When there is a rate increase on your insurance premium there is a reason for it, even if you don’t think there is. Usually these increased insurance premiums are the result of a car accident or a ticket you may have had in the last coverage period.

Other times, increased insurance premiums are the result of things completely out of your control. For example, rate increases can happen because the insurance company needs to bring in more money to cover increased employee costs. Other times rate increases happen because the insurance company is going under and they are trying everything they can to stay in business.

If you have seen increased insurance premiums and nothing on your side has changed, you need to contact your insurance company or insurance agent to find out why. It could just be because the company decided on a rate increase to bring in more money; which may be a sign to you that it is time to start shopping around for other insurance coverage.

Insurance companies are all about protecting from risk and your payment to them is no different.

Insurance companies make you pay when you get your insurance policy (down payment) to protect themselves from providing you insurance coverage for free. If they provided you insurance coverage and didn’t bill you until later, there is nothing stopping you from cancelling your insurance policy and going to another carrier without paying. And if you had a claim in that time period they would be on the hook to pay for it even though you never paid them.

Now, you can argue that they could just cancel the policy back to the effective date if you don’t make the payment. However, there are so many laws that dictate that they have to give you so many days of notice before they can cancel your policy and technically you have signed a contract with them that they will provide you coverage. With these two legal aspects, a good attorney could argue that they would be responsible for paying for the damages if you had an accident.

So for an insurance company, your down payment is an “insurance policy” (please excuse the pun) for them. Besides, if you think about it, anything you buy has to be paid for in advance before you walk out of a store and it is really no different with insurance.

Q: We asked our insurance company to cancel our policy effective the 28th of February but our effective date shows March 1st, is this right?

Yes, the date your insurance company shows as the effective date of cancellation is correct. If you asked the company to end your insurance policy effective the 28th then that is your last day of insurance coverage with them; effective March 1st you no longer have any coverage with them.

Whenever you cancel your insurance you want to be very specific as to what day you want the last day of coverage with that company to be. An easy way to tell them is just to say that you have new coverage with another insurance company started on a specific day and you want your coverage to end the day before.

Shopping around for insurance anytime is a good idea.

Q: I have been with my insurance company for 28 years and they raised my insurance premium almost 20% after my first at-fault accident in December. I just had another at-fault accident this March, but it was after my renewal. I have already been told to look for a 100 – 150% increase in my insurance premium on my renewal next year because of the 2nd accident. Should I start looking for a new insurance company before then? If so, how do I go about it?

A: It is always a good idea to shop around for insurance anytime you are unhappy with your insurance company, when you are curious if there are better rates out there, or if you are just bored on a rainy Saturday afternoon. In your case though, I would hold off until you see what the renewal amount is going to be on your insurance premium next year for two reasons.

One, I am surprised to hear that they gave you a percentage increase for your next renewal due to your second accident. Usually, insurance companies shy away from saying anything because until that computer calculates all of your information no one really knows what an increase will be. So you may not have as big of an increase as they are telling you right now. If you switch to an insurance company that offers you a rate just a little lower than this 100-150% increase and you take it, you may be switching to a higher premium and never know it.

Two, your current insurance company is only charging you with one at-fault accident in the calculations. When you start to shop around for insurance, these other companies are going to be figuring in 2 at-fault accidents. So enjoy the lower premium with just the one accident with your current company for the next year.

As far as finding a new agent or broker, I would take a look and see who sells insurance in your area. Talk to your friends and family to see who they are insured with, and read online reviews about the different insurance companies to see what people are saying.

To start, you can get quotes for different companies through our website by clicking here. This will give you a chance to shop around for insurance in just one place as you will get a number of different premiums from companies and agents in your area; then you can do the research on those specific companies as to who has the best reputation.

Insurance companies can’t even tell you what will happen at your renewal in advance.

Q: I have had 2 at-fault accidents in a little over 3 years, with one of the accidents being severe enough that the other party’s damages may exceed my coverage limits. I also just recently got my first traffic infraction from this last accident. What will happen at my upcoming April renewal?

A: It is really hard to say what will happen at your renewal. Each insurance company has their own way of doing things and what one company may do another may not.

Here are my thoughts of the different scenarios that may happen though:

1) Your insurance premium will go up because of the accidents and a new infraction on your driving record.

2) Your insurance company will drop your coverage because of the multiple at-fault accidents and the infraction.

3) Nothing will happen yet because the 2nd claim may not be settled and your driving record may not get pulled this renewal.

All you can really do is wait to hear from the insurance company about the renewal. For the moment though, you still have insurance coverage. Your company also has to give you plenty of notice if they are going to drop you, so you can get new coverage in place before it ends.