Why is Insurance Expensive

Why Is Insurance So Expensive?

Every day in our office we hear the same question; why is my insurance so expensive? We understand it’s frustrating to pay for insurance. Especially since it’s something you spend money on hoping you’ll never have to use. We agents have to pay our own insurance premiums too, so we understand!

We want our customers to know, high insurance premiums and rate increases impact everybody.


What Affects A Customer’s Rate?

Every insurance company has actuaries employed on their staff. The sole job of these actuaries is to take into account all the hundreds of factors that impact a person’s rate. They, in a sense, assess potential risks and assign rating scores to those risks.


Here are a few of the many rating factors:

  • Loss history
  • Credit report
  • Insurance history
  • Your zip code

That’s why we see such high rates in Oklahoma. Some carriers won’t offer to write coverage in the 73160 zip code, a.k.a. Moore, Oklahoma. Some carriers won’t even offer coverage in this state, period.


Oklahoma sees every type of weather event possible:

  • Tornadoes
  • Earthquakes
  • Even our August 2019 storm, inland hurricane strength winds!

High loss ratios are one of the reasons why our premiums are high.


An Example of Why Insurance is Expensive:

Now, let’s look at premiums associated with auto policies. Premiums on auto policies are probably what we hear the most complaints about. It is normal to see a rate increase at every renewal on your auto policy. Why? Take into account all these new vehicles that are hitting the road every year. Newer vehicles come equipped with all sorts of fancy gadgets like:

  • A warning signal for changing lanes
  • Backup cameras
  • Heated steering wheels
  • And so much more.

These gadgets are getting more and more expensive to repair and replace. We also have to take into account how expensive medical bills have become. One small trip to the emergency room could cost someone upwards of $5000.

The majority of your auto policy is covering you for liability. Meaning, it’s covering you for the chance that you may be at fault in an accident. So, even though your vehicle may be older, your insurance policy is protecting you for the potential liability that may arise when you rear-end a Volvo.


Call Us:

If you’re ever concerned about your rates being too high, give us a call or email us. We can go over your policy with you and explain any risk factors that we may see as affecting your rate. It’s our job to help you understand your insurance policy!