Natural disasters hitting insurance premiums
Question from Dena D. of Carmel:
It sure seems like we’ve had a rough year when it comes to natural disasters and major storms. Is this going to affect my insurance premium, or is it only based on what is happening in my area?
Response from Ryan Samuelson:
It’s been a rough couple of years for insurance carriers if you’re talking about homeowners insurance. The cost of a homeowners policy is on the rise across the nation. We’re here to help you understand why those rates are going up, and what you can do to avoid or offset those costs.
We have had a sustained rough patch when it comes to natural disasters and weather. The last year and a half has been very rough on the bottom line for insurers. Let’s recap what has happened:
● Hurricane Irene ran up the East Coast
● Wind and hail caused more than 20,000 severe weather reports
● Tornadoes tore across Missouri and Alabama
● Wildfires blazed all summer in Arizona, Texas and New Mexico
● Tornadoes destroyed Southern Indiana
● Multiple earthquakes, with the most significant in Virginia
These losses have also put a strain on the construction and materials industries, driving up repair costs. This has led to the repair cost of some homes to exceed their market value.
So what’s the plan?
First, we have to recommend you place your insurance with an independent insurance agent. Independent insurance agents represent a variety of carriers (a carrier would be Travelers,Hartford,Erie, Central, etc.) and can get you multiple quotes to find the best fit for you. There are also a couple of ways to offset a cost increase if you get hit with one:
● Increasing your deductibles exposes you to a little bit more if you have a loss, but can lower your premiums.
● Policy bundling is a great way to lower your insurance costs if you don’t have your homeowners and auto insurance with the same carrier.
● Some carriers give loyalty and/or experience credits. Stay with the same carrier for multiple years and these credits can be added.
● Loss prevention can also get you some bonus credits. Call your agent and see if adding a burglar and/or fire alarm to your home would qualify you for additional savings.