{"id":1509,"date":"2013-02-03T11:51:50","date_gmt":"2013-02-03T16:51:50","guid":{"rendered":"https:\/\/www.insureyourcompany.com\/?p=1509"},"modified":"2024-07-16T11:38:43","modified_gmt":"2024-07-16T15:38:43","slug":"why-do-my-insurance-premiums-change-every-year","status":"publish","type":"post","link":"https:\/\/insureyourcompany.com\/blog\/why-do-my-insurance-premiums-change-every-year\/","title":{"rendered":"Why do my insurance premiums change every year?"},"content":{"rendered":"

In most cases, insurance policies are in force for one year and need to be renewed to continue coverage.\u00a0 Insurance companies base their rates in part on cost of living as well as other factors to determine how much premium to charge.\u00a0 At our technology insurance agency<\/a>, we like to explain to our clients what factors an insurance company looks at when creating rates. Understanding the why and how of an insurance premium make our clients better consumers.\u00a0 Being an educated consumer will help you become a better business owner.<\/p>\n

There are two categories to look at when understanding insurance premiums; inside factors and outside factors.\u00a0 Inside factors are within the insurance company.\u00a0 The salaries they pay their employees the benefits they provide and the overall cost of doing business. \u00a0Every business in every industry has to account for annual cost of living increases. Did you know one primary way a state funds itself is through insurance taxes?\u00a0 The Federal and state governments tax insurance companies.\u00a0 The taxes help fund counties and municipalities, fire department and police. \u00a0\u00a0Insurance companies have internal departments to account and try to control these costs so they can keep their premiums low.<\/p>\n

Outside factors affect the insurance company as a whole.\u00a0 The way the stock market performs, new laws that are passed, and catastrophic claims are all factors that the insurance company has no control of and affect the premiums.\u00a0 The insurance carrier accepts your premium and puts it aside in their claims pool.\u00a0 When a claim happens they pay out.\u00a0 While that reserve is still sitting there most insurance companies invest in the stock market, bonds and other investments to maxims their profit.\u00a0 So when the investments do well, the premiums go down when times and when the investments don\u2019t do so well, there\u2019s a good chance premiums will go up.<\/p>\n

Premiums can increase following a catastrophic claim.\u00a0 For us on the east coast we recently experienced Hurricane Sandy<\/a>.\u00a0 Its wide range of damage affected many people.\u00a0 Homes and business where lost, property was damaged and people where injured.\u00a0 Insurance is here to indemnify, to provide somebody with protection, especially financial protection, against possible loss, damage, or liability, and help give people their lives back.\u00a0 A large payout like this empties the insurance company\u2019s claims pool.\u00a0 In response they will adjust premiums to replenish the pool.<\/p>\n

There is another factor that has a large influence on insurance premiums, you, the business.\u00a0 Your business is seen as a risk to an insurance company.\u00a0 Your business is at risk from an accident or lawsuit.\u00a0 To measure the risk of each business, insurance carriers will look at several pieces of information.\u00a0 Your revenue, the number of employees you have, payroll and square footage of your business location.\u00a0 The revenue and square footage of a business tells how large of a company you are.\u00a0 It will tell them how much of your product you are selling or how many people are coming into your store.\u00a0 Your payroll will tell how many employees you have and projects you are working on. They also want to know what you do, what type of industry are you in. \u00a0If you are a contractor you are more likely to be involved in a worker\u2019s compensation claim than a person sitting behind a computer all day.\u00a0 Each year these factors will change, to measure the change an audit may be done asking for financial records.\u00a0 These changes will inevitably change the price the insurance company charges you.<\/p>\n","protected":false},"excerpt":{"rendered":"

In most cases, insurance policies are in force for one year and need to be renewed to continue coverage.\u00a0 Insurance companies base their rates in part on cost of living as well as other factors to determine how much premium to charge.\u00a0 At our technology insurance agency, we like to explain to our clients what […]<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"om_disable_all_campaigns":false,"inline_featured_image":false,"_monsterinsights_skip_tracking":false,"footnotes":""},"categories":[76],"tags":[],"class_list":["post-1509","post","type-post","status-publish","format-standard","hentry","category-business-insurance"],"acf":[],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t