You’ve likely seen the headlines: “Car Insurance Rates Soar!”, “Homeowners Insurance Costs on the Rise Again!” It’s a trend nobody enjoys, and for good reason. The cost of auto and home insurance has been climbing steadily over the past few years, squeezing budgets, and leaving many wondering what to do.
If you are a regular reader of our insurance blog, you know that we’ve already covered the factors driving these increases:
- Rising repair costs due to parts shortages and inflation
- An increased cost due to increasingly high-tech vehicles
- A spike in severe weather events like hail and Derechos (sustained violent winds) used to be rare, can be more damaging than tornadoes.
- More frequent and intense natural disasters like hurricanes, wildfires, and floods
- The lingering effects of the pandemic
These are just a few items that have contributed to the increased cost of claims. These factors have created a perfect storm for insurance companies, significantly increasing claims payouts. The result? Some insurers are struggling to stay afloat.
This has, unfortunately, resulted in some drastic measures by some property and casualty (P&C) insurance companies. Some have been forced to exit the market entirely, leaving policyholders scrambling for new coverage. Others have resorted to non-renewing existing policies, not writing new policies, or pushing through hefty premium hikes.
It’s a challenging situation for everyone involved. While the consumers’ initial reaction is to shop and look for savings. Switching insurance companies right now might not be the magic bullet you’re looking for:
- The Grass Isn’t Always Greener: we’ve become conditioned to switch companies to save money, however, the entire P&C market is experiencing the same pressures. Companies who offered attractive rates yesterday have and are increasing them dramatically. Carriers are changing.
- Losing Valuable Discounts: some companies offer loyalty discounts for sticking with them for a certain period, others grandfather previous rating structures that have since been increased. Switching providers could mean losing those discounts or a favorable rating structure, ultimately negating any potential savings found elsewhere.
- Starting from Scratch: You’ve likely built up a claim’s history with your current provider. This history plays a role in determining your premium, and a clean slate with a new company could mean higher rates, especially if you’ve had any past claims.
So, what should you do?
Remember, this is temporary and will change. Until then, when in a turbulent market, do what you do in a storm. Hunker down, make sure you’re protected and wait for the storm to pass, before attempting to move and change positions.
The best course of action right now might be to stay put and work with your current insurer.
- Review your policy: review your coverage details to make sure it’s current and accurate. There might be opportunities to adjust your policy and lower your premiums without sacrificing essential coverage. We often learn people forget to tell us they replaced their roofs. A new roof is eligible for a discount.
- Ask about discounts: confirm that you’re receiving all the discounts you’re entitled to, such as: good driving records, multiple policy bundling, telematics, or a new roof.
- Increase your deductible: This is your first line of defense and a common way to lower your premium.
Remember, we are your independent insurance agent. We have access to many insurance companies and can help you compare rates and coverage options. However, don’t be surprised if we advise you to hold off on switching for now, given the current market volatility.
This situation is undoubtedly frustrating for everyone, but it is temporary. That’s more reason to maintain a long-term perspective. Insurance companies are constantly analyzing data and adjusting their rates accordingly. Eventually, premiums will ease, and underwriting will relax.
In the meantime, make sure you are covered appropriately, and work with us to find all available savings. Stick with it today and soon, you’ll find yourself in the best position when the market settles and carriers reopen for business.
