We've discussed frequency and severity of claims before on our blog. It's a topic that keeps coming up, and it's important to know how it can affect you.
When someone gets a new ticket or files a claim, they natuarally expect that there might be some impact to their insurance pricing. It is generally understood that something like a speeding ticket or an at-fault accident will make someone's insurance price go up. This has always been the case and is generally true.
What people don't expect is that those tickets or claims can come back to haunt them years after they happen. Take the following scenario into consideration: in June 2018, Steve gets a speeding ticket as a result of an accident he caused by driving too fast. Steve now has both a speeding ticket and an at-fault accident on his record. Steve's insurance renews in January 2019 and, as expected, his price goes up. Steve was expecting this as a cost for his bad driving, and Steve moves on. For all of 2019, Steve is a much better driver and has no new tickets or accidents. When Steve gets his renewal for January 2020, he is surprised to see his price has gone up again! Why did this happen?
This happened because insurance carriers are continuing to see a bigger correlation between past activity and future risk, and they are therefore continuing to adjust their future pricing for actions that happened in the past. Steve is now being charged more for his past accident and ticket, despite not having any new accidents or tickets in the year immediately preceeding his renewal.
This type of pricing activity is not unique to one carrier or this one scenario. We are seeing this activity across the board, and we expect it to continue. The best thing you can do to protect your insurance pricing is be safe! Drive safely for conditions, don't file claims on your auto or your home, and, if you do, don't be surprised if the price goes up!
Have questions? Call us anytime at (248) 531-8300.
Levin Insurance Agency
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