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All You Ever Wanted to Know About Insurance

Why Insurance Pricing is So Puzzling

SEATTLE, Wash. - You’ve probably asked it before. Maybe you’re wondering it now – ‘Why am I paying what I’m paying for my insurance?’ Our team at Insurance Services Group hears this question a lot and rightfully so. Insurance is challenging, it can be confusing, and we understand why you feel frustrated at times. You see your premium go up and you want to know why – you didn’t have an accident, or a claim – so how can your rate just increase?

This month, we tackled the question of premium pricing in an article for Edmonds Living Local. If you’ve ever wondered what goes into calculating what you pay for insurance and why - the information below should help.


It starts with a funny noise – a rattle, a pop, that awful ear-piercing screech. Whatever it is you know one thing for sure – it’s time for help. You take your car in for a checkup when something doesn’t sound right or when it’s time for routine maintenance - so why not treat your insurance the same?

If we look back over the last 10 years so many things have changed – phones, computers, cars – the same can be said for the insurance industry, yet you may not pay attention to these changes until a bill shows up in the mail and you notice your insurance rates have gone up.

A lot goes into figuring out why you pay what you pay for insurance – and no two people and policies are alike when it comes to the insurance carriers. Have you had any accidents in the last three years? What about five years? Have you filed any claims on your homeowner’s policy? Are you a new driver? What does your credit look like? These are just a few of things insurance carriers want to know before they will assume the risk.

Quote vs. Premium

An insurance quote and an insurance premium are not the same – it’s important to understand this when shopping for insurance. A quote is an estimate of premium for the kind of coverage you request based on the initial information you provide.

A quote is NOT a guarantee of what you might end up actually paying for your premium once a carrier reviews and evaluates your record. That analysis typically includes information about your age, health, experience, and any prior tickets or claims you may have filed or were filed against you.

The price you are quoted verses the actual price of your premium also depends on how your quote was calculated. And as is the case with coverage - every insurance provider calculates these numbers slightly different. Ultimately it comes down to the individual insurance carriers, their state filings, and the underwriting departments to determine your final premium payment. 

A Method to the Madness

Our team gets asked the question a lot – how did you come up with that number? The answer - WE didn’t but we understand why many ask this, we’re clients too and we know firsthand insurance can be confusing.

The quick answer is that figuring out insurance premiums isn’t easy. Insurance companies hire and develop people who specialize in this exact area, known as actuaries. It’s their job to analyze and evaluate information for each client – age, driving record, claims history, and a lot more. An actuary then predicts how likely an insurance applicant is to make a claim on their policy. The higher the chance usually the higher the premium.

It should come as no surprise - teens and young drivers are likely to pay more in premium than say their parent. They don’t have the experience, driving record, or credit history their parents do so as far as an insurance carrier is concerned they are more of a risk to insure than mom or dad.

It Pays to Review

One of the things our team focuses on is account reviews. As the market and company underwriting requirements change it’s a good idea to review and evaluate insurance policies to make sure you have what you need in place in the event something happens in the future.

You go to the doctor when you’re sick but it’s just as important, if not more, to visit when you’re healthy. This is how we view insurance and our clients. It never hurts to have your policy reviewed. As an independent agency we welcome these ‘check-ups’ – and we advise our clients to do it with their policies as their needs change.

One of the ‘value adds’ of working with an independent agency is the ability to evaluate multiple carriers at the same time, under the same roof.  Imagine how much easier it would be to visit just one auto shop location with multiple auto mechanics from different companies and getting multiple quotes at the same time. Now take that concept and put it to use when it comes to your insurance. It doesn’t get much easier than that and that’s exactly why we are here.