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Price Optimization sounds like a nice term doesn't it? It can be but not when it comes to insurance! In fact it is the Insurance Industry's Dirty Little Secret.


Many companies reward their most loyal clients with incentives, freebies and discounts. But in car insurance, the opposite can actually happen. Price optimization is a little known technique that penalizes loyal auto insurance customers by charging them higher rates because their insurer believes they are unlikely to shop around for a better price.

By mining data and testing incremental price increases, some insurers try to predict who is less likely to switch companies, and then charge those customers more in order to squeeze out higher profits. Something I like to call a loyalty tax.

Many Illinois drivers are being punished with higher premiums just for being loyal to their insurance company.

According to this Wall Street journal Article Allstate and other car insurance companies try to identify customers who are unlikely to switch companies or even shop their rates. Which turns out to be about 60% of all policy holders

Allstate initially denied it uses "any form of  price optimization", but in 2011 Allstate filed a report with the SEC saying that it does indeed use price optimization. As an Allstate agent for 12 years I can tell you that Allstate does in fact use price optimization in their rating. The longer you have been insured with them the more likely you are overpaying. 

Nine states so far have banned price optimization (Pennsylvania, California, Florida, Maine, Indiana, Maryland, Vermont, Washington and Ohio),  but it is alive and well in Illinois.

No insurance company will tell you if they are charging you more due to price optimization, the only way you can keep the insurance company honest is by shopping your rate every few years. Complacency can end up costing you big money.

This is why I feel it is best to use an independent insurance agent. They will have access to multiple companies and can shop your rate for you. Once you find an agent that is a good fit for you, you can keep the same relationship with your agent, but switch companies as needed.


Will Getting a Pet Raise My Insurance Rate?


No, getting a pet should not raise your home insurance rate, but it might make your policy ineligible with your current company. While I don't know of any insurance company that will charge extra for a pet, there are many (in fact most) that have a list of animals they will not allow to be in a home they insure.

Certain breeds of dogs, some snakes and other exotic pets are deal breakers for some companies. Some insurance companies will allow some of these pets, but will exclude them from the liability coverage on the policy. That means if they bite somebody, you will be getting a bill or summons.

 Full Disclosure is the best course of action. Do Not try and hide the fact you have a dog on your companies no-write list from the company or your agent. Doing so could void your policy at a time you need it most due to misrepresentation.

Make sure you check with your agent before you bring home that pet and fall in love with it to make sure it is allowed on your policy, or it might be time to look for a different company.


Contact an Insurance Expert at Rueck Insurance.


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Disclaimer: This article is for informational purposely only. There is no legal advice being suggested or proffered and the author assumes no responsibility or liability for the actions taken or not taken by the readers based upon such information.



At Rueck Insurance we know that insurance can be confusing, that's why we are taking the time to answer 100 most frequently asked insurance questions and post the here on the Rueck Insurance Blog

We Hope that the 100 Frequently Asked Questions will become a valued resource for you when you need to make an informed insurance decision.

We know you are busy, that's why we took the time to also record the answer to each question and put them on YouTube in a video that is 2 minutes or less.

That means you can find the answer to your insurance questions in 2 minutes or less and get back to your busy day!

It’s our hope that you will find very useful answers to some common insurance questions while getting to know us a little better at the same time.

If you would like to discuss your insurance questions with us directly, please feel free to give us a call at (217) 355-9075 or you contact us via email here.

100 Frequently Asked Insurance Questions

Auto Insurance

1. Why do rates go up as the value of my vehicle goes down?

2.  What is the Difference between Collision and Comprehensive Coverge?

3.  Does Car Insurance Cover a Chipped or Broken Windshield?

4.  Does Car Insurance Cover Hail Damage? 

5.  Do I have Insurance when I drive my new car off the lot?

6.  Should I buy a 6 or 12 month Insurance Policy?

7.  If my Garage burns down, will my homeowners insurance cover the damage to my car?

8.   Do you need insurance for a rental car?

9.   I am borrowing a friend's I covered?

10. What do I need to get a car insurance quote?

11. Should I buy Gap Insurance for my New Car?

12. Does Insurance cover theft of personal property from my car?

13. Why don't All Insurance Companies Offer Accident Forgiveness? 

Home Insurance

1. Is Termite Damage covered on my Home Insurance Policy?

2.  Do I need Flood Insurance? 

3. Will getting a Pet Raise My Insurance Rate?

4. What do I need to get a Home Insurance Quote?

5. What is "other structures" property coverage on my Home Insurance?

General Insurance Questions and Terms

1. Why does Credit Affect the Price of My Insurance?


3. Why do I need to provide my Social Security Number to get an insurance quote?

4. Does how I pay for my insurance affect my rate?

5. What is Insurance Price Optimization? The Insurance Industry's Dirty Little Secret


Still can’t find the answer to your insurance questions?

We’re here to help. Click here to submit your question, and we’ll get you the answer ASAP!

There is no such thing as too simple or too silly a question. If you’re looking for the answer to whatever your insurance question is, we promise you there are others as well who are asking the same question.

Disclaimer: This article is for informational purposely only. There is no legal advice being suggested or proffered and the author assumes no responsibility or liability for the actions taken or not taken by the readers based upon such information.

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Rueck Insurance is your independent, one-stop insurance center for all your personal and business insurance needs in Illinois. Insurance shopping is easy when the Protection Team provides you with multiple quotes to choose from. You will always know you are getting the best coverage at the lowest possible price.

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Rueck Insurance is your independent, one-stop insurance center for all your personal and business insurance needs in Illinois.

702 Bloomington Rd#205
    Champaign, Illnois
(217) 355-9075

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