My insurance increased for no reason. If I had a nickel for every time I heard this phrase, I’d have $1.65.
Actually, add another 5 cents to my total. I was browsing through a Toronto group on Reddit when I saw this statement that a user wrote:
“Doesn’t auto insurance go up every year for everyone if you stay with the same company, regardless of claims or tickets? They’ll say it’s because of a higher frequency of thefts and collisions, but it’s just a game they play to see how much they can squeeze out of you. They increase the rates for no reason”
This one almost made my head explode, so perhaps I should add 10 cents to my total rather than a nickel.
I want to address this statement, bit-by-bit:
Doesn’t auto insurance go up every year if you stay with the same company, regardless of claims or tickets?
Haha… no! The opposite, actually. Most insurance companies have a loyalty discount that gets bigger the longer you stay with them. I mean, you might be paying more for car insurance than you did in 2015, but couldn’t you say the same thing about bread at the grocery store, gas prices, apartment rent, new cars, and restaurant meals? Inflation happens and insurance companies aren’t immune to it. Insurance rates are relative. Yes, they’ll generally increase with inflation, but you’ll also be generally paying less in time if you don’t change insurance companies every year.
They’ll say it’s because of a higher frequency of thefts and collisions, but it’s just a game they play to see how much they can squeeze out of you.
Insurance companies aren’t allowed to play the game that the user is suggesting. Insurance rates have to be pre-approved by the Financial Services Regulatory Authority of Ontario (FSRA). But then, if there actually are a higher frequency of thefts and collisions, that has to be paid for.
They increase the rates for no reason
If your car insurance rate increased, it’s because your insurance company applied to have the rate increased and the FSRA approved it. FSRA won’t approve a rate increase for no reason. They’ll approve it if the insurance company’s loss ratios increase, though.
I suspect that the Reddit user still wouldn’t be satisfied with my reply. I suspect he’d reply with something along the lines of, I had no claims so it increased for no reason for myself. Actually, this is a common belief. But you have to understand the very definition of insurance to understand that that still does not make it no reason. The definition of insurance is “the losses of the few are covered by the many,” It cannot work any other way. Relatively few people have insurable losses in any given year. Some of those are catastrophic losses that would ruin them financial had they not had insurance. A few more of these and insurance rates increase for everyone. That’s not a “no reason.” That’s a reason.
