Did my insurance company give me a BS answer regarding a rate increase?
July 21, 2014 8:23 AM   Subscribe

I recently received my renewal notice in the mail for my auto insurance policy. The premium (for the entire year) increased by almost $100. I called my insurance company to find out why, and my BS detector is going off.

The policy is for two cars, with myself and my wife listed as drivers on both cars.

The rate increase was not explained by any factors I could think of:

- We have not changed coverage.
- We have the same two cars.
- Neither of us has been in an accident over the past year.
- Neither of us have gotten a ticket in the past year.
- We have not made any claims over the past year.

The rate increased by almost $100 for the year. I called my insurance company and asked why. After being placed on hold for about 2 minutes, I was told it was a (Maryland) state government mandated increase on all drivers across all insurance companies. This seems like a BS answer just to get me off the phone. I'm sure something like that would have been mentioned on local news media, quoting all sorts of public outrage, and yet I've heard nothing and read nothing about it. Further, none of my co-workers, and no one I know locally, has mentioned such an increase, nor expressed disbelief at any increase in their auto insurance premium. Finally, I can find no mention of a Maryland auto insurance rate increase by using Google.

I've had this same insurance company for both auto and renter's or homeowner's insurance (as appropriate) for six years now. I've been very happy with them compared with other insurance companies I've had in the past, though in those six years I have never made a claim, so I can't speak to their claims service.

However, I'm not sure I'm happy staying with an insurance company if I don't feel that they are being honest with me. Was this a BS answer? Should I go shopping for another insurance company?
posted by tckma to Work & Money (15 answers total) 1 user marked this as a favorite
Get a quote from another vendor, if it's substantially lower, go back and tell your insurance company that you're leaving and see what their retention specialists can do for you.

Insurance companies will ding long-term customers unless you spook them every few years.
posted by straw at 8:29 AM on July 21, 2014 [4 favorites]

This is what my company (esurance) told me about Rhode island a few weeks ago when I questioned a similar price jump. No idea if it's bs, I'll be watching the answers with interest.
posted by geegollygosh at 8:29 AM on July 21, 2014

Was this a BS answer?

You seem to have the odd idea that rate increases need to be "fair" or "justified". They don't. Stop concerning yourself with why the rate increase occurred, just that it did.

Should I go shopping for another insurance company?

I get competing quotes for insurance every year for exactly this reason. There's no downside to shopping around, and you'll quickly find whether your rates are competitive or not.
posted by saeculorum at 8:33 AM on July 21, 2014 [6 favorites]

Best answer: If there was a mandated increase in premiums, the part of the state government that would be administering that change and monitoring compliance would be Maryland Insurance Administration. When I've heard weird things from my car or homeowners insurance company I've called the state insurance agency and they've never failed to be quite helpful in either confirming or denying what my insurer is telling me, and providing suggestions about what my options are. (I think the state department/division in nearly every state has a consumer hotline or person who does nothing other than answer questions along these lines.)

I don't see anything on the Maryland Insurance Administration website about this $100 increase, so I would guess they're creatively stretching the truth, but you should be able to contact MIA directly and ask them what the deal is. It looks like they have a phone number and email address dedicated to answering consumer questions and complaints about auto insurance policies.
posted by iminurmefi at 8:39 AM on July 21, 2014 [2 favorites]

This is what car insurance companies do (and other insurance companies). They increase the rate when your policy automatically renews, because x% of customers won't check the new rate/will check the new rate won't bother to change providers. The money they lose in people moving away from them due to the rate increase is more than made up for by the money they make on people who don't change.

The best thing to do is just change insurance provider every year (using a comparison site to find the best deal) so you get the "new customer" decent rate. In the ~15 years I've been driving, I've probably stayed with the same insurance company 2 years in a row... twice I think?

You can also call them up again and tell them you're cancelling because they cost too much and Other Provider is only $X (get a real rate, don't make it up) - sometimes they will magically find a discount for you so you can get a a good deal without having to change insurance company.

(I'm in the UK but the process seems broadly similar if you're in the US).
posted by EndsOfInvention at 8:49 AM on July 21, 2014

Now's the time to get some new quotes. Who cares if what your current carrier told you is legit? Get your declarations page from your current insurance and go into actual offices to discuss your coverage and get some price quotes.

If you can do better, great! If not, hey, what did you lose?
posted by Ruthless Bunny at 8:55 AM on July 21, 2014

Insurance rate increases do not have to be explained to you for any particular reason.

Rates go up because costs go up. Your insurance company pools risks and costs - so, if on the whole, they're now paying 5% more to fix cars, and for medical claims, and lawsuits, then they're going to raise everybody's rates 5%. It is not necessarily related to you. It's like cost of living, cost of doing insurance business rises.
posted by Ms Vegetable at 8:55 AM on July 21, 2014

Best answer: The standard BS answer I had to give as an auto insurance customer service rep was "due to an increase in claims in your area we had to increase our rates for all customers." This means, we increased our rates because we wanted to.

The rate increase is probably not "mandated" by the state insurance commission but "approved."
Shop around to see if you can get something cheaper.
posted by interplanetjanet at 9:29 AM on July 21, 2014 [2 favorites]

In most states, insurance rate increases have to be approved by a state Insurance Commissioner. As far as I know, they usually set maximum rates, not mandatory rates, and it's quite likely that someone (probably the person who shouted an answer to your telephone representative while you're on hold) confused "approved a rate increase" with "raised the rates". You should still get competitive quotes from other companies, but it is possible, especially with a smaller state such as Maryland, that the insurers pooled their data for the rate filing & they might all have gotten the rate increase. (Insurance is treated as a regulated monopoly because of this data sharing, that's why there's a commission to set rates)
posted by mr vino at 9:31 AM on July 21, 2014 [1 favorite]

Best answer: Every business everywhere will point a finger at something to explain a rate increase. For a while Dodd-Frank was the go-to blame. The sensible response to this is "no shit you have costs and some of them are regulatory; that's called 'business'" but everyone likes a game of pass the buck - including you. After all, that's why you called and asked for an explanation. You wouldn't have been happy with "because it did" but really that's what it is. So is it a BS answer? Kinda and kinda not, I would say. But it's irrelevant - you don't really care why so much as you just don't want to pay more and are trying to decide if their stated reasoning is good enough for you to avoid doing more than being irked.

Insurance is marginally different than most expenses since there's always a regulatory board; ditto and more so for power companies. But still, the rate is what the rate is and if you don't like it, shop around and/or write your local regulatory body. I have not personally experienced this constant rate increase that people above claim happens, and have periodically gotten refund checks, but that may be a function of how my insurance company is organized. If you're not happy then shop around.

Personally I have now dealt with enough spread of insurance companies that I am not going to shop purely on price anytime soon; I have had too much annoyance from no-name oddballs and GEICO when having to collect from other people's insurance. That's part of my calculation of worth, as was the convenience of using Parkmobile when they upped their transaction fee a year or two ago. They decided to take adding that fee as an opportunity to take a swipe at the consumer protection act which I think is primarily horseshit, but in the end the upshot to me is no different: it's $0.13 more every time I use the app.

It's worth it to me, regardless of whether the reason it went up is a CEO boat payment or an increase in credit card clearinghouse costs due to regulation that stops cost-shifting based on card user profiles and loyalty programs. If you don't care who provides your insurance then shop around. If you sorta care then shop around and call them back and say "XYZ company will do this for less; how bad do you want to keep me?" Or just pay it and stop worrying about why it's more.
posted by phearlez at 9:52 AM on July 21, 2014 [1 favorite]

This is an argument for pricing your insurance at least once a year, if not twice. The advent of online comparison sites makes it super easy.

But yeah 100 bucks would be a huge fee increase. I'm sure they are either lying or misspeaking.
posted by JPD at 9:59 AM on July 21, 2014 [1 favorite]

I had Progressive for a short time when I lived in MA. After a year, they increased my rate by $200/year. (And I had no accidents, tickets, etc.) When I called them about it, they told me the extra fees were due to a state-wide increase and there was nothing to be done about it.

I called another insurance company (state farm) who quoted me what I was getting previously and switched.
posted by herox at 10:53 AM on July 21, 2014 [1 favorite]

You didn't ask for recommendations, but I'm going to mention one anyway. If you fall under any of the categories that they will insure (generally this requires either previous military service, a family military connection, or certain other kinds of qualifying government service) USAA is an excellent insurer who has never given me problems of this sort. And in fact, as a USAA customer you will occasionally get a pleasant surprise -- if they've collected in excess of what they need to operate and pay claims, they refund the difference to their customers.
posted by Nerd of the North at 1:06 PM on July 21, 2014

Response by poster: Unfortunately, I do not qualify for USAA insurance (believe me, I've looked into it before, given the scads of positive reviews and recommendations I've been privvy to over the years), otherwise I'd be all over it.

Still shopping around. Thus far I've already got a quote for about $75 less than what I paid for car insurance this year, which even includes a lower collision deductible. I really didn't think there was THAT much variability in price across insurance companies, but I guess that comes from having lived in Massachusetts for so long (where insurance is so heavily regulated by the state that companies can only compete on customer service) when I first started my adult life.

I guess I'll go back to my current insurer with that quote and see what they do.
posted by tckma at 1:22 PM on July 21, 2014

Best answer: Texas Office of Public Insurance Counsel: Not Shopping for Insurance Can Lead to Overcharges

Time: Proof That Loyalty Is For Suckers: Best Customers Get Penalized With Higher Bills

As you guessed, for new customers, insurance is a commodity that gets driven down to the market level. The place for them to make profits is in taking advantage of customers who don't shop for new insurance regularly.

Disclosure: Yep, I'm long-time a USAA (CICA) customer, which means that I can end any insurance sales pitch by just saying four letters. Always results in a "thank you for your time, have a nice day".
posted by straw at 2:16 PM on July 21, 2014

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