Why Insurance Rates Keep Going Up and How to Keep Yours Down
Your insurance bill arrives. Whether you are looking at an email, text, or letter; you want to learn the amount due. And if the rate has gone up you’re angry. You don’t want to pay more money for insurance than you have to. But what is the right amount? And are there ways to bring your costs down?
How to Analyze Your Insurance Bill
First you have to understand how to read your bill and understand your policy. If you just bought a new car or added an addition to your home, your rates are going to increase. That’s common sense. The higher the value of an item, the higher the cost of insuring it. But other increases as a result of claims and economics, are beyond your control. Let’s review them one by one.
The Effect of the Coronavirus on the Insurance Industry
Since the arrival of the novel coronavirus in the United States, lifestyle changes have had both positive and negative effects on insurance claims. More people working from home means fewer cars on the road and few accidents. But the increase on home improvement projects and home building has caused the price of building materials to go up by as much as 60 percent in recent months. Your home’s rebuild cost determines what you pay for dwelling coverage.
Weather events: Tornadoes, hurricanes, blizzards, and floods all impact the insurance industry. Claims go up and insurance companies may have to readjust premiums the following year to help mitigate losses. The need for building materials to rebuild, after the claims are paid, further increases the demand for lumber and cause prices to again rise.
Home Location Factors Into Your Rate
The location of your house; how far away it is from the fire department and fire hydrant will further factor into the rate you are given for homeowner’s insurance. The same often applies to a vehicle. If an auto is operated in an area of dense population, the insurance rate will usually be higher than in a thinly populated rural area where there is a record of fewer accidents.
Factors such as building materials, age, and safety record help determine insurance rates. You can lower your rates by taking advantage of discounts for alarm systems, deadbolt locks and bundling policies.
How Can You Reduce Car Insurance Costs?
You car insurance premium is also affected by your age, your driving record, how much you drive, your credit score, and the insurance coverage limits you select. Statistically consumers with higher credit scores take better care of their property and are thus less likely to be involved in accidents. Claims cost insurance companies time and money. By choosing higher deductibles, meaning that you only ask for reimbursement when your loss has reached a certain threshold– $250, $500, or $1,000—you are likely to file fewer claims.
If you are driving a very old car, another way to reduce costs on your premium is to take a look at your collision coverage and comprehensive coverage. These both pay for the actual cash value ( depreciated value) if your car is damaged by another vehicle, an incident such as vandalism, or an object such as a falling tree.
Review the Year’s Activity Before Jumping to Conclusions
What can be confusing, is that policy increases are typically factored in months after an event such as a new car purchase occurs. So if you are surprised by an increase on your bill, review your entire previous year to fully understand possible increases.
Save Money on Your Homeowner’s Insurance By Investing in Your Home
Home upgrades such as a new roof or upgraded electrical system can save you money on your premium because these upgrades make your home safer. Contact your agent to let them know about these kinds of home improvements.
As always, when you have a question, call your agent. At Crilly Insurance we are happy to try and answer any questions you may have. As part of our job we will try to help you find the company for you that provides the best value and we will work with you to try to reduce costs to fit your budget. Visit Crillyinsurance.com to set up a teleconference or appointment today. We’re just a phone call away.