What Affects my Premium?

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Most everyone wants to know what affects their premium, and rightfully so! How can you take the proper steps to reduce your payments if you don’t know what’s affecting the premium? We’re going to look at this from two different types of policies, the auto policy and homeowner’s policy. It’s important to understand that insurance companies can only continue to pay claims if they charge the proper premium for the risk they’re insuring. So how do they determine what to charge you, the insured, for the policy you’ve applied for? Read below to find out!

Normally, both auto and home insurance policies will take the following into consideration:

  • Insurance Scores –
    • This is a credit based score that takes into account loss frequency, payment history, and other factors
  • Claims History –
    • Most companies will order loss runs for any policy that’s been in your name. The frequency, severity and type of losses all play into what risk category your policy gets placed into. It’s important to keep a history of all claims that have been paid on your policies if you ever need to dispute any that are pulled up during a loss runs inquiry. You’ll most likely need the documentation to prove what actually happened or didn’t happen. We’ve seen claims that turn up on properties that were never turned in on the policy, usually a letter from your current agent will suffice as proof.

For auto policies, companies take the following into account when determining your premium:

  • Driving Record –
    • This includes any citations for speeding tickets or other traffic violations.
    • Companies are also looking for any accidents that are deemed as “at-fault” or “not-at-fault”. Again, it’s important to keep records of the police report if you ever need to dispute what’s being reported.
  • Type and Age of Vehicle –
    • This shouldn’t be too surprising, but the newer the vehicle the higher the premium. The current vehicles being manufactured normally cost a significant amount of money to repair, even if it’s just a fender bender.
    • Safety features and who’s driving the vehicle also affects the premium charged for that specific vehicle.

For home policies, we usually see these affect rate the most:

  • Replacement Cost of the house
    • The more it takes to replace or repair the house, the more premium a company will charge.
  • Updates to the house
    • Roof, wiring, plumbing and HVAC updates are all extremely important pieces of information when rating policies. The more recent the updates, the more reliable they are which lowers the risk of partial or total losses due to age or wear and tear.
  • Do you have a pool?
    • Companies usually charge more premium for the added liability exposure that comes with owning a pool.
  • Do you have a pet?
    • Pets come with an added liability exposure as well, be honest about the breed though because some policies exclude specific breeds of dogs.

Of course, this list is not all inclusive and every situation is different. If you haven’t reviewed your policy recently, it may be time to see if another company will offer you a better premium! Give any of our offices a call to review your current policies and get a free quote from one of our highly rated companies.

Do you have a question that you’d like to ask? Email us at customerservice@mayflowerwollam.com and we might use it in a future entry!

This article was written by Joshua Palmer

Josh is a licensed insurance agent with the Mayflower Wollam Insurance Group. He is a graduate of Mineral Ridge High School, Class of 2008, and attended the United States Air Force Academy, Class of 2012, where he earned a Bachelor of Science in Meteorology. Josh brings a unique background into the agency and focuses on a mixture of personal, commercial, farm and life insurance. His office is located in our Cortland location.

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