Most types of insurance involve an annual premium and renewal to ensure continuity of the coverage. One should review the terms of the renewal offer with care and an open mind as to whether it is preferable to take the easy course and renew or to update what coverage you may require. Although many of you won’t have experienced this, years ago insurance renewals – home, auto – were not fraught with double digit increases, non-renewal or changes in terms. In fact, in cases where the insured did not experience any claims or problems, it was not uncommon to see a decrease in premium at renewal time. This seemed to give credence to the idea that the insurance company considered the individual policy holder as well as other circumstances in determining the renewal offer terms.
Today, with the constant loud competition for customers and claims of how much one might save by choosing a particular insurance company over another, the relationship of the insured and insurer has become much more transactional and much more impersonal. Today, when renewal time comes, the insurance companies behave more like governments than service businesses. The one certainty at renewal is an increase in cost that bears no relation to any objective factor – increases always much higher than inflation, no consideration to claims history or lack thereof, no connection to the benefits or service, no explanation of why an increase is occurring and so on.
Of course, times have changed and with extravagant and extreme settlements and verdicts along with devastating wildfires, floods and hurricanes and the ever-rising costs of replacement, insurance companies have had to factor their increased risks into the equation. Even so, insureds should be aware that they will be charged not based on their particular history and situation with the insurance company but without consideration of those factors. Case in point: one client received their annual auto renewal offer – following a year without claims, tickets, or other change beyond an aging vehicle and owner – and found it included a 26% increase in annual premium without any increase in coverage or other benefit offered. How does that make sense? It is a great approach to drive customers away and my advice was to seek an insurer that actually wanted the client’s business.