June 2024
Financial Planning

Rising Cost of Property and Casualty Insurance

By Myra Alport

Feeling the pinch from auto and property insurance premiums? Americans have seen premiums rise exponentially over the past two years.

In some states like Florida, Louisiana and California, many insurers are no longer writing homeowners policies due to severe weather events related to hurricanes, tornadoes, floods and wildfires. The cost to replace and rebuild damaged homes is affected by rising prices for building materials, supply chain issues and a labor market shortage. In 2023, the average premium increase was more than 20%.

Another question you may be asking yourself given soaring property values (thank you, inflation):

Is my homeowner coverage adequate? Should I increase my homeowner insurance accordingly?

Higher property values mean the cost to rebuild or repair your home also increases. This prompts higher coverage limits to ensure that your policy adequately covers the cost of rebuilding your home in the event of a total loss as stated above. As insurance coverage limits increase to match higher property values, insurance premiums will typically rise as well because the carrier is taking on greater risk by providing higher coverage amounts.

When it comes to auto insurance, prices have remained high as well. Higher repair and material costs, increased litigation and more crashes are partially responsible. Personally, my auto insurance jumped 32% last year, so I switched carriers to reign in my premium.

How can we lower our premiums?

• ·Review your current auto coverage with your insurance carrier. Are you paying extra for coverage you no longer need such as collision coverage for an old vehicle, for example? How long do you plan to keep your adult children on your family policy?

• Bundle auto and homeowner policies to receive additional discounts.

• Upgrades to plumbing, roofing, fire safety, home security and electrical systems may qualify for discounts.

• Higher deductibles will lower your premiums. Ensure you can absorb a higher deductible by having savings on hand.

• Proactively shop around. Reach out to an independent insurance agent to explore options versus a “captive” insurance agent. What’s the difference? An independent agent doesn’t work for any particular insurance company; they sell policies across a number of companies. A captive agent sells insurance for only 1 insurance company (i.e., State Farm, Farmers, The Hartford, et al ) and is limited to the company’s product lines.

Please reach out to your advisor with any questions based on your personal circumstances.

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