Question 12:   Why did my automobile insurance premium increase upon renewal when I didn’t have an accident, change my vehicle or move to a new location?

Insurance is the pooling of premiums. In any given year, your insurance company puts all the premiums it collects into one large pool and uses that pool to pay for the losses of the few who make claims. The pool is constantly evaluated and replenished so that your insurer can meet its financial obligations and pay its claims obligations, cover operating expenses and earn a reasonable profit. This often requires that insurers file regular rate changes with the Board.

Insurers are required by law to submit a rate filing with the Board at least once every three years, but may do so more often if they wish. These rate filings detail the past experience of the insurer and provide estimates of future rate level requirements. These future requirements are based on actuarial analyses and are subject to review and approval by the Board. Ultimately, the rates required by insurers will change over time and may impact the premium you are charged even if your own personal circumstances have not changed.

Your insurance representative should be able to fully explain any premium changes that occur from year-to-year. It is also important to shop around, get multiple quotes and compare prices from different companies on a regular basis to ensure you are getting the best deal.