Very simply put: Insurance is priced based on the theory of large numbers.  For similar risks, enough premium has to be taken in by the insurance company to pay for all of the losses.  When disaster strikes, premiums go up as there has been an increase in the losses paid. 

This is a confusing concept to understand.  Just imagine that there are thousands of other people similar to you.  They are similar in age, credit score, number of accidents, claims turned in, etc.  Now, the insurance company knows that some of the people in your "risk profile" will suffer losses (fires, auto collisions, legal litigation, etc.).  They want to make sure they charge each of you proportionally to the number they estimate they will have to pay in losses.  Contrary to popular belief, most insurance companies barely break even on the premiums they bring in versus the amount they pay out.

This is a complicated question. Because no two people are alike, no two insurance policies are either. Insurance is priced on many factors, many of which you have some control over. Many companies offer "savings" to people that switch to them. However, we can show you some of the mechanisms they use to lower premiums that any company has the ability to do.

Deductibles

Remember that the higher the deductible, the lower the premium. This simple rule works because the more risk ($) you are willing to take on personally (self-insure), the less risk the insurance company has to loss. This is true for all lines of insurance. But, do not take on more risk than you can reasonably expect to cover. If coming up with $2,500 would be difficult to do, do not carry that high of a deductible.

"Package" your Home and Auto Insurance

Most companies offer a Multi-Policy Discount that is anywhere from 5% - 25% if you have more than one policy with them. This discount applies on both policies and typically saves people (who have their home and auto with two separate companies) hundreds of dollars.

Dwelling Replacement Cost

Remember not to confuse replacement cost with fair market value. Smart agents / brokers will perform a property valuation to determine adequate coverage limits. Some people may find that the cost to rebuild their home is actually less than they could sell it for.

Home Security Credits

You can usually get discounts of at least 5 percent for a smoke detector, burglar alarm or dead-bolt locks. Some companies may cut your premiums by as much as 15 or 20 percent if you install a sophisticated sprinkler system or a fire and burglar alarm that rings at the police, fire or other monitoring stations.

There are many more credits that might be available to you.  We gain an in-depth understanding of your profile to make sure you are getting al of the discounts available.

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There are other mechanisms used to lower premiums that are questionable.  Make sure you understand the implications before you agree to any of the following:

• Reduce your liability limits (home or auto)
• Remove physical damage (collision) coverage on your auto
• "Undervalue" your dwelling's replacement cost
• List a vehicle as "pleasure use", when it is used for work commute
• Removing "endorsements" that have been recommended by your agent / broker
• Move your coverage to a carrier with questionable financial stability

Our goal is to help you understand how to become an "Ideal Client" in the eyes of the insurance company.  The more attractive you are as a client, the better pricing you will have access to.  Contact us to discuss our process.