05/03/2024
Understanding Why Homeowners and Auto Premiums Are Soaring:
It is no secret that homeowners & auto insurance premiums are rising faster than inflation. Inflation is partly to blame for these increases. The cost of parts, materials and labor have jumped sharply in recent years. Even as inflation levels off, insurers are contending with mounting tolls from natural disasters such as floods, fires, wind, hail and other damaging storms; not just in the usual places but in many cases where they have never happened before. Flooding across the country from "once in a century" rainstorms in areas not near a body of water are the new norm. The number of cars totaled in each of these events is often left out of the news. Last year alone, there were an estimated two dozen storms with billion-dollar price tags! The cost to repair cars has also skyrocketed. New technology and sensors in the bumpers, windshields, etc. means safer cars but also translates to longer, more complicated and expensive repairs. Include parts shortages to the equation and car rental expenses are now for weeks/months instead of what used to be days. Sometimes the decision to total a car is affected by the time and cost it would take to repair it.
The there is dwindling supply of coverage availability. In many areas where insurance carriers do not believe the can accurately price insurance at a profit or predict natural disasters, they are simply abandoning the marketplace. For most people reading this, the difficulty buying homeowners and auto insurance in Florida and California is well known. Many are buying insurance from carriers with no rating and limited surplus (money to be able to pay claims).
There is no way to be insulated from what is going on but there are many way to manage the situation and minimize the price increases. Higher deductibles, combining or separating locations and coverage are simple generic answers. Thinking twice about putting in small claims is more critical than ever. Insureds with a history of claims are most always the first and most affected at the time of renewal.
While you may be feeling the immediate burden of this situation, understand that, in its overly simplest form, insurance is a for-profit business which starts with premium dollars in versus claim dollars out. Carriers are trying to strike a balance between staying financially stable while pricing coverage in an environment of rapidly rising claim dollars and unpredictable losses.
Should you have any questions or want to discuss your individual situation with our office, please, always, feel free to reach out to us. We are also members of this community, trying to navigate the rising costs in our personal lives as well. We understand and relate to your concerns, and we will do whatever is in our power to ease the burdens associated with your insurance premiums.
Sincerely,
The O'Toole Family & Staff
