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At Ravenhill Agencies, we know that one of the most common questions our clients ask is: “Why do my insurance premiums go up even if I haven’t filed a claim?” It’s a great question, and one that has many factors behind it. Let’s break it down for you.
The Basic Premise of Insurance
Insurance is designed to protect you from unexpected financial losses. By paying a premium, you share the risk with many other policyholders. When someone suffers a loss, whether due to a car accident, house damage, or health emergency, the collective premiums paid by all policyholders help cover those costs. In this way, insurance spreads the risk and reduces the financial impact of unforeseen events for individuals.
Why Do Premiums Increase?
While it can feel frustrating to see your insurance premiums go up, especially if you haven’t made a claim, there are a variety of reasons this happens—many of which are influenced by factors beyond your control.
1. Regional and Local Issues
Weather-Related Claims: Here in Alberta, we’ve seen an increase in extreme weather events like hailstorms, fire, and flooding. These natural disasters lead to a significant rise in claims, which pushes premiums up for everyone in the region, even if your home or vehicle wasn’t directly impacted. For example, Alberta’s hailstorm in 2024 alone caused nearly $2.8 billion in damages .
Increased Crime or Theft: If there’s a rise in car thefts or break-ins in your local area, insurance companies adjust their rates to account for the higher risk. Alberta has seen fluctuations in crime rates, impacting premiums for homeowners and auto insurance.
2. National and Global Factors
Reinsurance Costs: Insurance companies purchase their own insurance, called reinsurance, to protect themselves against massive claims from events like wildfires or flooding. When the cost of reinsurance rises, it gets passed down to policyholders. Major disasters, even if they occur outside of Canada, can lead to higher reinsurance costs that affect everyone nationally .
Inflation: Just like everything else, the cost of repairs, court cases, and medical care is rising. Insurance companies need to account for the increased costs of replacing a roof, trying a court case, or covering medical expenses. This inflationary pressure can lead to higher premiums across the board, even for those who haven’t filed claims.
Increased Fraud: Insurance fraud, while not common for most policyholders, does happen. Whether it’s exaggerated claims or staged accidents, these fraudulent activities drive up costs for everyone, as insurers adjust premiums to cover these losses.
3. Personal Factors
Driving History and Credit Scores: Even if you haven’t filed a claim, factors like your driving record or changes in your credit score can affect your premiums. Some insurers also review how long you’ve been with them, adjusting premiums based on loyalty or offering discounts for extended periods without claims.
What Can You Do?
While some factors, like weather events or national economic trends, are beyond your control, there are steps you can take to ensure you’re getting the best possible rates:
Review Your Coverage Regularly: Make sure you’re not over-insured or paying for coverage you no longer need.
Maintain a Good Credit Score: In some cases, improving your credit score can help reduce your premiums.
Ask About Discounts: Many insurers offer discounts for bundling policies (e.g., home and auto) or installing safety features like alarm systems.
We’re Here to Help
We understand that rising premiums can be frustrating, but we’re always here to help explain any changes and find ways to ensure you’re receiving the best coverage for your needs. If you have questions or want to review your policy, give us a call at Ravenhill Agencies.
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