Why Are My Insurance Rates Increasing—Am I Better Off With a Cheaper Policy? 

Insurance rates can fluctuate for a variety of reasons. Whether it’s your auto, home, business, renters, RV or boat insurance, you might notice your premium creeping up over time. Let’s explore why this might be happening and whether a cheaper policy would be beneficial.

Factors Influencing Rate Increases

Several factors can lead to an increase in your insurance rates, including the following:

• Claims history—If you’ve filed claims in the past, you may be considered a higher risk, leading to increased premiums.
• Changes in your situation—Moving, adding drivers or changing vehicles can affect your rates.
• Regulatory changes—Insurance is heavily regulated. Changes in laws or regulations can affect how much you pay.
• Economic environment—Severe inflation drives up insurance rates for everyone, regardless of claims history.

The Downside of Cheaper Policies

While a cheaper policy might be tempting, it’s essential to understand what you might be giving up. Cheaper policies often come with lower coverage limits, which could leave you exposed to significant out-of-pocket costs in the event of a claim.

Choosing high deductibles can lower your insurance premiums, but you’ll pay more in the event of a claim before your insurance coverage kicks in. Collaborate with your agent to determine whether a slight premium decrease is worth higher out-of-pocket claims costs.

Cheap insurance typically has fewer coverage features, leaving you unprotected against certain risks. While a less expensive policy might save you money on premiums, it could end up costing you more in the long run if it leaves you underinsured. It’s important to understand precisely what your policy covers—and what it doesn’t—before you choose new insurance coverage to ensure a fair comparison between policies.

Your agent can help you find a balance between cost and coverage. While nobody wants to pay more than necessary, sacrificing coverage for a lower premium could cost you more when making a claim.

Contact Us 

If you’ve experienced insurance rate increases, now is a great time to review your policy with an experienced local agent. Liberty Auto Insurance in San Antonio, Texas, can help you understand your current coverage, identify gaps and shop for a policy that fits your needs and budget.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.