I get this question at least five times every week, “Why is this so expensive?” or “What’s this going to cost me?” We are not like car salesmen who know the price up front, in fact, we’re not like retail stores at all. Before beginning my career in insurance, I was almost positive that the insurance genies put ridiculous numbers into a hat and whatever they drew out would be my premium for the year. Sometimes I loved the genies and sometimes I hated them. The truth is, whether it be your homeowners, your personal auto, your general liability or property for your business, health insurance, or commercial auto—the list goes on and on—my answer is always the same for every single case. It depends.
The unfortunate truth that I know and hopefully now you will know too, is that when I begin any quote, I generally have no idea what the price is going to be. It all depends. I can guess, sure! – but that never seems to turn out too well. Just like the weather in Oklahoma, our market is constantly changing and we must adapt with it. One week we have certain rules that we have to play by and the next, the rules are merely guidelines. Every company has a rating system that they go by to come up with the price and even that depends on how the company is doing, what kind of losses they took the year before, and how much could they lose this year.
If you’re wondering why your personal auto insurance is so expensive—it all depends. It all depends on what vehicle you drive, have you had a ticket within the past three years, have you wrecked recently, how many drivers do you have, are there any drivers under the age of 16, how many cars, what are your limits, what’s your deductible, do you have good credit and many other factors. No two policies were created equally, especially when it comes to your personal insurance. They are all tailored specifically for the individual. If your friend tells you he’s paying $50.00 a month and is driving a brand new BMW, red flags should immediately go off in your head about what kind of protection he actually has. Vehicles are easily damaged and expensive when it does happen.
If you’re wondering why your homeowner’s policy is so expensive I would still tell you the same thing-It all depends. When it comes to covering your home what kind of construction is it, how is the upkeep, how close are you to a fire hydrant and a fire department, do you have a pool, trampoline, or dogs? The very city that you have chosen to make your home even has an effect. After the tornadoes that happened in our state in 2013, companies took such a hard hit regarding property with all the losses suffered that they had no choice but to increase rates to survive, which I’m sure a majority of people have noticed by now. I know I did. Some people pray for rain each year, but as an insurance agent, I pray for a hazard free year, because with disaster free years usually comes lowered rates again.
If you’re wondering why your business’s insurance is so expensive I’m sure you know what my answer would be—It all depends. In every type of coverage, prior claim history is always a big factor. With your general liability, it all depends on what you do. If you own a skydiving company that pushes people out of planes for fun, it is probably going to be a lot more expensive than if you own a lemonade stand on the side of the road. Insurance companies evaluate the risk that is involved with your profession and with that they need to know exactly what they are covering and how much it may cost them worst case scenario. General liability has to be based off something, sometimes it’s based off payroll, sometimes gross sales, sometimes area, or something else. For worker’s compensation, it depends on how many employees you have and what they are doing. A truck driver is going to have a higher rate than the clerical employee that sits in an office all day. With your property it will depend on how big it is, what you store in it, if it has sprinklers or alarms, what your business involves, how tall storage racks are, and so many other things. That’s just the basics without adding in specialized coverage for your specific type of business. Your commercial auto may depend on how many cars and drivers you have, if you want comp and collision, how big your traveling radius is, what your driver’s prior driving history looks like and just like the rest, many other factors.
I’m sure by now, you’ve figured out that definitely with health insurance, the price all depends. Health insurance is based off your current state of health. They take into account preexisting conditions, how old you are, what type of coverages you want added in there, and if they’re currently on disability. The human body is so complex, I cannot even begin to imagine trying to come up with a complex algorithm to figure out how to protect against everything that could go wrong, but they have.
Insurance is a necessity this day and age. Insurance is sometimes the difference between major failure or success. I was always told to have three important things when it came to my personal and professional life; Always have a good attorney. Always have a good accountant…And always have a good insurance agent. If you have a good insurance agent, then they already know these things and are getting you the best protection at the best value possible.