08/23/2024
Dear Clients,
I wanted to take a moment to address something that’s on many of our minds: the rising cost of insurance premiums. Over the last couple of years, we’ve seen an increase in premiums, which has understandably caused frustration and concern.
Many of you may have heard that inflation is to blame, and while that’s part of the story, there’s more to it. I want to help you understand why this is happening and what it means for you.
Why Are Insurance Rates Going Up?
Insurance is essentially a way to transfer the risk of a potential loss from you to the insurance company. In exchange for a premium, the insurance company takes on that risk, so you don’t have to bear it all yourself—other than your chosen deductible.
However, the cost of taking on that risk has increased. Claims have become more expensive due to several factors:
• Rising Vehicle Costs: The price of vehicles has gone up, which means repairs and replacements cost more.
• Higher Wages: As wages have increased, so have the costs for labor, including repairs.
• Increased Lawsuits: The frequency and severity of lawsuits, especially from injuries, have added to the costs.
• Weather-Related Losses: Severe weather events have caused significant damage, leading to more claims and higher payouts.
The Impact on Home Insurance
The risk to homes has also increased. The cost of building materials has skyrocketed, meaning it’s now more expensive to rebuild or repair homes. This increase in costs means insurance companies are facing higher risks, which in turn, causes premiums to rise. A clear example of this is the cost of roof shingles. In 2020 the average cost of a square of shingles (which covers 100 square feet) was around $90. In 2024, that same square can now cost $150.
What Can You Do?
I understand that this isn’t the news anyone wants to hear, but there are ways to manage your premium costs:
• Increase Your Deductible: By choosing a higher deductible, you can take on more of the risk yourself, which can lower your premium.
• Review Your Coverage: In some cases, you might find that adjusting your coverage could reduce your costs.
Why Are Rates Going Up Even If You Haven’t Filed a Claim?
It’s a fair question, and here’s why: Insurance companies need to balance the money they collect in premiums with the money they pay out in claims. Even if you haven’t filed a claim, the overall risk pool has changed. It only takes one large claim to offset years of premiums. That’s why rates are adjusted across the board.
I know this can be frustrating, but it’s important to remember why you have insurance in the first place: to protect yourself from financial ruin in the event of a major loss, like a house fire or a serious car accident.
I’m here to help you navigate these changes. If you have any questions or want to review your policy to find ways to manage your costs, please don’t hesitate to reach out. Understanding your coverage is crucial, and your peace of mind is my top priority. I’m here to support you in any way I can.
Thank you for trusting me with your insurance needs.
