A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products, including home, life, auto, and commercial, and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, mainly in the insuranc...

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Reviewed by Leslie Kasperowicz
Farmers Insurance CSR 4 Years

UPDATED: Oct 28, 2021

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Important facts to know...

If car insurance rates never changed, there’d be no reason for someone to shop around when they’re looking for the best deal. Insurance rates charged by all of the major insurance companies change on an almost daily basis.

There are both environmental factors and economic factors that each play a role in how much a company needs to charge to stay in the black.

All consumers who want to get insurance need to manage their time wisely so they have time to get dozens of quotes. The quantity of the quotes you get is important for comparison purposes but the timing is important too.

If you really want to find the best rate, don’t start getting your quotes too early or the rates could change. Get comparison quotes today.

Rates in the Auto Insurance Marketplace Are Influenced By the Economy

The auto insurance marketplace is a very competitive one. Even though competition is crucial, companies that sell personal car insurance products in the finance industry must stay profitable to stay afloat when there are so many other companies that can take their clients.

The last thing an insurance company wants to do is go insolvent.

Rate-making is a complex process. The company must predict how many losses clients will have and then factor in actual costs. Insurers use predictions made by expert actuaries to project future claims payouts.

When the economy changes and it costs a carrier more to operate, the carrier has to cover the increased operational expenses by raising their rates.

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Insurance Companies Set Their Own Rates

One of the main reasons that the marketplace is so competitive is because states regulate the marketplace and carriers are free to establish their own rates. No single carrier will charge the same exact rate for each individual that applies.

Some quotes may be similar, but they’ll never be exactly the same.

If a company could simply charge whatever rate, you might wonder why they wouldn’t just undercut every other competitor to get the most business. This is an option but it’s one that will land the carrier in hot water really quickly.

Charging adequate rates is important. Companies can be competitive in every market. This is why most of the existing providers have targeted a niche and priced their rates right in this market only.

Can an insurance company raise rates any time they want?

If you get a quote and you decide to hold off on switching companies, don’t wait too long.

Insurance companies can’t raise their company-wide rates in the blink of an eye, but they can file a request through the state to raise their rates when they feel like they’re not collecting enough to cover expenses.

When insurance companies file requests to change their rates, they need to include information supporting their application. The information needs to show that the increase is fair and reasonable.

After the department in charge of reviewing rates grants their approval, the new quotes given by the insurer will be higher.

If you get a quote, does the insurance company have to honor it?

When you get auto insurance quotes, those quotes aren’t guaranteed. Some companies will give you a day to a week to submit your application to bind the rate, but others don’t bind anything until you submit your first payment and you turn in your complete application.

If you get a great quote and you want to buy it in a few weeks, that great quote could change. That’s why you should always put in your application for the new policy if you need the coverage to take effect within the next 30 days.

This can safeguard you so that you don’t end up losing out on the discount you wanted.

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Can my own personal factors change my quote?

You can’t always predict when your life will change. If you were playing around with an auto insurance quote tool and you got estimates in the past, you can’t expect all of those estimates to the stay the same.

While many blame company-wide rate increases, it’s not always rate increases that will affect your estimates. Sometimes it’s your personal factors.

Insurance companies have base rates that change after a long list of personal factors is considered. If one or many of your personal factors have changed from the time you got a quote, your new quote will be different.

Some of your personal factors change often and others will never change. Here are some common factors that could raise your rates:

  • Moving to a New Zip Code – if your garaging address changes, your rates for liability and physical damage coverage could change in a positive or negative way
  • Your Driving Experience Changes – if you’ve had a birthday since your last quote, your rates could go down because you’ve added another year of driving experience
  • You Recently Had an Accident – if you’ve had an at-fault accident and the claim has been settled since your last quote, your new quote will include and accident surcharge
  • You Were Convicted of a Moving Violation – if you’re cited and then convicted of a moving violation, the new quote will include the ticket surcharge
  • You Get a New Car – the year, make, model, and ISO classification will affect your rates

If your current policy is about to expire or you’re going to buy a car in the near future, you should get some quotes to see if one company offers a better price than another.

The best way to get dozens of quotes is to use an online comparison tool. Get yourself instant rate quotes and then secure the policy to secure the rate that you like the most. Use our comparison tool to get started.