The Walters Agency Podcast

The Premium: Understanding What Drives Your Insurance Costs

• Timothy Walters • Episode 10

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What Factors Affect My Insurance Premiums And How Can I Lower My Costs?

Rising insurance premiums have many of us scratching our heads, wondering what's behind the increases and if there's anything we can do about them. Timothy Walters, licensed insurance agent and owner of The Walters Agency, breaks down the hidden factors affecting your rates and offers practical solutions to help manage costs.

Many consumers fall into the trap of constantly shopping for the lowest premium without understanding the underlying factors that follow them between companies. For auto insurance, accidents and tickets obviously impact rates, but did you know those small towing claims do too? Insurance companies track claim frequency, and even minor incidents contribute to your risk profile. Timothy suggests joining an auto club like AAA instead of relying on insurance-based roadside assistance to avoid these small claims affecting your premiums.

Your insurance history significantly influences rates, with coverage lapses exceeding 30 days triggering substantial surcharges. Companies view these gaps as indicators of higher risk, potentially leading to higher premiums regardless of which provider you choose. Similarly, credit scores and payment history factor into eligibility and rates in many states, as insurers want reassurance that you'll consistently pay your premiums.

For homeowners insurance, property maintenance is crucial. Roof condition has become increasingly important to insurers, with many companies restricting coverage for homes with shingle roofs over ten years old. Timothy recommends considering metal roofs for their longevity and insurability. Additionally, keep your yard clean and free of debris – insurance inspectors flag unkempt properties as red flags. Other factors like trampolines, swimming pools, and certain dog breeds may limit your insurance options or require additional safety measures.

Want professional guidance navigating these insurance complexities? Call or text 423-417-2070 for a free 20-minute consultation with The Walters Agency to find coverage that protects what matters most while keeping costs manageable.

To learn more about The Walters Agency visit:
https://www.brightway.com/agencies/tn/knoxville/0237/team
The Walters Agency
7009 Asheville Hwy
Knoxville, TN 37924
423-417-2070

Speaker 1:

Welcome to the Walters Agency podcast, where insurance meets peace of mind. Hosted by licensed insurance agent and owner, timothy Walters, we're here to help families, homeowners and small business owners throughout East Tennessee protect what matters most Our mission creating win-win-win solutions for insurance. Let's dive in.

Speaker 2:

From risk score to repair cost. Your premium is more personalized than you might think. In this episode, we unpack the key factors behind the number and what you can do to bring it down. Pack the key factors behind the number and what you can do to bring it down. Welcome back everyone. Skip Monty, co-host, slash producer, back in the studio with Mr Timothy Walters, licensed insurance agent and owner of the Walters agency.

Speaker 3:

Timothy, how's it going? Well, how you doing.

Speaker 2:

Doing just fine, a little hot. It is, summertime started, as you said earlier before we started, finally turned it on. Finally turned it on, so which I'm cool with that. I'd rather deal with the heat than I would the cold personally, but that's just me.

Speaker 3:

Give me fall man. I like the cooler weather. I'm hot-blooded.

Speaker 2:

Spring and fall are my favorite by far, so one thing that's happened across the last fall and spring is insurance premiums are going up, so we'll get more into why. But what factors affect my insurance premiums and how can I make an effort to lower my costs? Is that?

Speaker 3:

possible? Yeah, no, absolutely. There's a lot of things people can do to help lower their cost of insurance over time. I think a lot of people fall into a trap where they're just constantly looking for the cheapest rate. That's what I get called on. I want my insurance cheaper, cheaper, cheaper. There's factors that they don't consider that are going to affect their rates negatively, no matter where they get, so they're going to end up paying more insurance over time. Even if they change companies and get a lower rate temporarily, insurance is going to continue to rise because of those factors. Plus, as we discussed previously on the podcast, factors like inflation and a lot of the other things that we have absolutely no control over as agents or as consumers of insurance products.

Speaker 3:

But for the two types of insurance that people see most often, you know the one that they deal with is home and auto insurance and there are some things that definitely affect those rates. So, specifically for auto, of course, the obvious is accidents and tickets. If you're not a great driver, if you're having accidents pretty regularly, yes, your insurance is going to be higher. Even if you don't have a conflict collision, if you don't have physical damage coverage on your policy, if you're just rolling with liability, you're still a higher risk because you're going to go out there. The insurance companies are looking at this. Statistically speaking, you're going to be more likely to cause an accident where someone else is injured or their property is damaged, and that's a lot of money, that's a lot of exposure for the insurance company, so your rates are going to be higher. You know, and that's that's kind of common sense, right?

Speaker 3:

People look at something that they paid for they shouldn't affect their insurance but still does is things like tow claims. So a lot of people will buy endorsements on their auto insurance that will help them pay for, you know, towing bills if their vehicle, you know, is disabled or runs out of gas or something happens where they have to call a tow truck and they can get reimbursement for all or part of that cost or something along those lines. Those still count as a loss, as a claim on your record, and insurance companies in the last probably 10 years, but the last five years especially, have started looking at claim frequency really closely. So even if you're not having high value claims like, even if it's not thousands and thousands of dollars, if they see, oh, this person's filed three or four small claims. Again, statistically speaking, they're higher risk. So they're looking at that more closely as well.

Speaker 3:

And actually what I've started recommending to my clients is, instead of, you know, having that service taken care of for the toes under your insurance, try to find an auto club like AAA or there's different auto clubs out there. Aaa is the one that everybody thinks of, and I'm a member, and they don't pay me to say this. It's just what I do. It's an affordable service, one that everybody thinks of, and I'm a member, and they don't pay me to say this. This is just what I do. It's an affordable service and if you use it, you know if you do have to use it, like if you didn't get a tow truck or something like that, or you get your car unlocked as you locked your keys in it, like I do all the time that's not going to affect your insurance rates. So there's that. A lot of times people don't think about that, because when I ask about accident tickets, they'll say, oh, I don't have any accident tickets and then we'll pull the records and they've got three or four towing claims.

Speaker 3:

Again that counts.

Speaker 2:

So does like a windshield replacement apply to that as well.

Speaker 3:

Yeah, any loss, any loss that the insurance company ends up paying for, is going to go on the record as a loss, as a claim, and different types of losses are rated. You know they're weighted differently, but they absolutely do count. So that's something a lot of people don't consider. The other thing, the last thing on the auto, is your insurance history. Here's where a lot of people run into trouble, especially if they've run into financial difficulties, which is certainly understandable.

Speaker 3:

But people will let their insurance lapse, you know, and they might go a couple of days without insurance or they might go in some cases, a very long time without insurance. And when companies see that the rule of thumb is, you know, any lapse over 30 days, you're definitely going to get some surcharges because the insurance companies are basically going to assume statistically that you're more likely to either stop paying your insurance or decide you don't need the insurance, or something's going to happen where they have gone through the cost of writing your policy, issuing your documents and taking on that risk. And most insurance companies don't even make money on policies for at least one or two terms. So if they see that this person does not have a good record of keeping insurance, then they're going to consider that higher risk and they're going to charge more on the front end, and that's just a fact. That's just a fact of business. You know people don't like it, but that's the way it is.

Speaker 2:

Well, if it definitely has an effect. So if someone, let's say, just forgets, or their on vacation and their policy ends today and they're like, oh crap, tomorrow they FedEx or call or make a payment over the phone or whatever, the next day, like a day or two later, is that impactful?

Speaker 3:

Usually if they call their carrier or their agent and they get that taken care of. Most companies have a grace period if you do miss your payment day and the policy goes into cancellation. If you make that payment, you know within a couple of days. Typically that's not going to be a big deal. As long as it's not happening every month or every renewal, that's probably not going to be an issue. You know, again, like the standard rule of thumb is for lapses is like companies really look at for 30 days. You know if you don't have a more than 30-day lapse, you know it's not going to have a huge impact. Unless it's happening to you every month or every renewal, then that's going to be seen because big data knows everything.

Speaker 3:

Okay, and again, I don't particularly care for it, I don't like living in the matrix any more than anybody else, but the big data's got all of our stuff and insurance companies. They do check that stuff out. They are going to find out. People think they're not going to find out. They are going to find out. And they pull all of that into the data that they look at Because, again, data is what drives their rates. That's how they establish like establish who's a good risk and who's a bad risk?

Speaker 3:

They're going to grab every bit of data that they can legally get for their individual clients and make sure they're trying to accurately gauge the risk that a client has as part of their look of business. That's just how the business works.

Speaker 2:

Does credit score have any impact?

Speaker 3:

on it. It can, depending on what state you're in. Some states have statutes that bar insurance companies from using credit as part of their rating factor. Some companies take it more into account than others. It really depends. I mean, I'm not going to say it can't affect. I would say one thing about credit score, would say like one thing about credit score. Really, the main thing about credit score is when insurance companies are trying to find out is does this person have a good history of actually paying their bills? Because, again, a lot of the reading that comes up on insurance companies books and, incidentally, insurance agents books is when we write business and the company offers business and that person stops paying, you know, in fairly short order because there's a cost involved. When you write business, okay, and for instance, I would say, you know, as an agent, we get paid a certain commission and I don't care to say this. You know people you get commissioned for you know what you do?

Speaker 3:

yeah, I do. That's how I get paid you know I don't work for free.

Speaker 3:

But uh, if somebody say, for instance paid a month ahead you know, pay for the first month of insurance and and then they, you know, cancel the policy 15 days later. Whatever I got paid, I'm going to have to pay a portion of that back to the insurance company. Yeah, it's called a chargeback, and insurance companies also have to swallow the costs that they have for, you know, the employees that help process that or the underwriting staff that reviewed it. There's a lot of things, there's a lot of costs that people don't think about when it comes to insurance policy being written and managed, and so, yeah, the insurance companies want to make sure that the people they're writing are more likely to continue to pay for that policy, at least, you know, for the full term. And so, yeah, yeah, credit payment history, all that kind of stuff, can affect your rates and it can also affect how much down payment insurance companies are going to require as well.

Speaker 2:

Makes sense. Well, are there? Finally, are there smart upgrades, tips that you can, you know, safety features, tips that you can give folks that can lead to real savings, like smoke detectors that can lead to real savings, like smoke detectors, yeah.

Speaker 3:

so like talking about home insurance, and I'll say home insurance, you know, has many of the same aspects you know. As far as, like your loss history, yeah, if you filed claims, you know that's going to affect your rates, the maintenance of the home, of course, updates to things like your electrical, your plumbing, your roof especially the roof is a big deal these days. I used to tell people you know, if you're going to replace your roof, go ahead and probably get a metal roof, because shingle roofs are not what they used to be. They don't last as long and insurance companies are realizing that. So a lot of them are not going to do anything over 10 years for shingle roofs.

Speaker 3:

But yeah, all of that you know basic maintenance on the house can affect it. Make sure your yard's clean. I can't say how many times I've submitted a homeowner's insurance policy and then the insurance company will send the inspection out, because I'll do an exterior inspection of the house and they'll send pictures back and there's literally trash piled up in the yard, for whatever reason, and they're not going to do that. The insurance company does a huge red flag. They are not going to want to do that.

Speaker 3:

And so, yeah, let's make sure your house is in good order. Animals, you know to some degree. You know certain breeds of dogs sometimes are not allowed. With different insurance companies it's always a good question to ask. That can affect your rate as well. Trampolines, swimming pools yeah, that can affect your eligibility and rates for homeowners insurance. And also, again, you know, talking about something people probably don't think about is this is going to take a lot of people off.

Speaker 3:

But if you own an older house, you know, just age-wise typically 40 or 50 years old some companies are either going to not want to insure the house, even if it's in pretty good shape, or they're going to have some stipulations on what kind of coverage they offer. And it's always a good question to ask. So you know my house was built, you know here it's in good order. What's the best carrier for this age of a house? And then they're going to ask, hey, has the plumbing been replaced? Because a lot of companies don't want to do galvanized plumbing anymore because it's getting older, it's probably going to fail at some point. That's going to be potentially a big loss for the company. The electrical systems they're going to make sure that they've been updated. And again that roof thing. The roof is huge for insurance.

Speaker 2:

Yeah, unfortunately, I'm well aware of how big that is, unfortunately. Well, timothy, thanks so much. That was a lot to break down and it's great to give our listeners some tools that they can really use. Clean your yard. Don't have a trampoline, don't have a pool. Make sure you're in good shape. You can have those things.

Speaker 3:

Just don't be surprised if make sure your roof is in good shape. You can have those things. Just don't be surprised if it limits the field of your choice for insurance. Like I said, I write. I write homes with trampolines and swimming pools all the time. But there's stipulations. They gotta be secured, you know, used behind a fence or net or something. I thought it's uh uh. Like I said, just talk to your agent. If you ever get good agent, they're going to be straight up with you. Some people get mad at me because I'm honest with them and a guy got mad at me last week because I told him some news he didn't want to hear. But I'm not going to sit here and lie to people about facts. I'm just going to be straight up with you. I'm going to be nonce, I'm not going to sugarcoat things and we're just. We're here to solve problems for people and to tell them the truth.

Speaker 3:

So if you have a decent agent. Just be honest with them and they'll tell you what's up.

Speaker 2:

And if you don't have a decent agent, you got one sitting right here giving you lots of tips on how to save money. So give them a call, All right, Tim.

Speaker 3:

It's free advice.

Speaker 2:

There you go, definitely want to get deeper into. At the beginning I mentioned that premiums are going up, so maybe we can, while that's happening, maybe we can get into that in the next episode.

Speaker 3:

Yeah, yeah, absolutely, we'll talk about it.

Speaker 2:

All right, man, thanks so much. We will see you soon, all right.

Speaker 3:

Thanks, Skip.

Speaker 1:

That's a wrap on this episode of the Walters Agency Podcast. Ready to find the right coverage for your home, business or family? Call or text 423-417-2070 for a free 20-minute consultation. Until next time, stay covered, stay protected and keep winning with the Walters Agency.