Why do auto insurance premiums go up?

I love when auto insurance premiums go up because it sparks people to give me a call to get a better rate; and truthfully, 9 times out of 10, we can get them a better rate. To be fair, I do want to try and explain a little bit about why auto premiums go up even when someone has no tickets or claims. Its always a little bit of a mystery to me that despite the cost of everything else go up in price, when insurance prices rise it is some big mysterious thing. Food cost go up, clothing cost go up, utility cost go up, homes prices increase, gas prices go up.

So, why does insurance go up for someone who doesn’t file a claim or get a ticket. Well, the cost to repair and replace cars has risen dramatically. 50 years ago, there weren’t many cars on the road worth $80,000. Now a days there a quite a few. Insurance carriers have to pay the cost to replace and repair those cars when the are in an accident. When you purchase insurance, you enter into a “risk pool” with everyone else who purchases insurance from that company. If it were not this way, you would be “self-insured” and your premiums would be 10 times higher. The idea is that by pooling everyone together, the insurance company can lower the cost of insurance for everyone because the likelyhood over everyone getting in an accident is minimal. When something does go wrong, much like the Arizona hail storm of 10/05/2010, prices rise because the insurance carrier must spread the cost of the claim amongst everyone in the “risk pool.”

The best way to keep your premium down is by calling Insurance Professionals of Arizona at 480-981-6338. We shop the market for you to find you the best price and coverage. We would love to help you save money on your Arizona auto insurance. Whether you live in Mesa AZ, Chandler Az, Gilbert Az or anywhere else, we can help you.

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