Let me first split this question into categories.  

  1. For personal home and auto insurance, the rates are dictated mainly by algorithms. Some companies offer first-accident forgiveness, and some don’t.  You have to check with your particular insurance carrier. Most of the time, if you have an accident with your home and auto, the algorithm will factor you as a less advantageous risk, and yes, your rates will go up.
  2. For commercial insurance, the answer is less straightforward. Underwriters have much more latitude to make decisions for business insurance. They base their response on one question:

“Will this account make money for the company in the future?”

Insurance companies break even when they pay less than $0.55 in claims for every $1 they collect in premiums. And as my dad says, “No one goes into business just to break even.” When the underwriter looks to renew the account, they will go through a series of questions.

  • “What type of business is this?”
    • “Has my management told me they want to insure more accounts like this?”
    • “Has my company made money on this type of business?”
  • “What type of claims did the customer experience?”
    • “How large is it?”
    • “Is it indicative of bad management or housekeeping?”
    • “Could it have been prevented?”
  • “Will the customer do something to prevent similar claims in the future?”

Underwriters usually have a range of pricing they are looking to achieve for a particular account. Businesses they believe will be more profitable for the company will receive the lower end of the range. Businesses they are concerned about will have the higher end of the range.

So while there is no straightforward “yes” or “no” answer to the question, there is an excellent guiding principle – the most profitable accounts for the company get the best rates.


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