By Lisa Brown, Managing Director, Altus Private Risk
If you’ve ever compared insurance premium costs with a friend or neighbor, you might find they pay significantly less (or more) than you. While it might seem like one of you was able to negotiate a better deal, the truth is insurance costs can vary immensely from person to person––and typically for reasons far beyond negotiation skills.
When you receive an insurance quote, insurers determine the premiums you pay for coverage based on a variety of factors and criteria unique to you, your household, and the type of insurance you’re purchasing.
To cover your home, a carrier looks at the age of your home, the zip code or county it is located in, and what losses have occurred over the past few years. For auto insurance, factors that might impact your premium include the age of drivers, number of family cars, the zip code you’re driving in and your claims history (or lack thereof).
Insurers may use different criteria to determine their premium, but quotes are based on providing specific insurance coverage for specific individuals. When looking for coverage, many buyers believe they can shop around between brokers to find and negotiate the best deal. However, quotes won’t change when moving from broker to broker if you’re using the same factors and same insurance carrier.
Brokers can, however, work with you to ensure you’re looking for the appropriate coverage and using all applicable credits––potentially reducing the amount you pay and preventing you from overspending on coverages you don’t need.
Many insurers offer specific credits for things like safe driving or having a backup generator in your home. These credits show that you’re considered less of a risk and therefore lower your premiums. But understanding what credits are available and whether or not you qualify for them can be challenging.
Your broker should work with you to determine which carrier best fits your unique needs and what premium credits you may qualify for. They should consistently reevaluate your policy coverage at each renewal period to ensure your plan is still the best fit and make recommendations, changes or enhancements.
Bottom line: Despite what many people think, an insurance premium isn’t something that can be negotiated. Your broker doesn’t have control or influence over the factors a carrier uses to determine their rate––but they can (and should) work on your behalf to get the coverage you need at an appropriate cost.