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
- 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 or pushing through hefty premium hikes.
It’s a challenging situation for everyone involved. However, in this turbulent market, the age-old advice of “if it ain’t broke, don’t fix it” might be more relevant than ever. Here’s why switching insurance companies right now might not be the magic bullet you’re looking for:
- The Grass Isn’t Always Greener: While switching companies might seem like a quick way to save money, there’s no guarantee your new provider won’t eventually implement similar rate increases. The entire P&C market is experiencing these pressures, and even companies offering attractive rates today might have to adjust in the future.
- Losing Valuable Discounts: Many insurance companies offer loyalty discounts for sticking with them for a certain period. Switching providers could mean losing those discounts, potentially negating any initial savings you find elsewhere.
- Starting from Scratch: You’ve likely built up a claims 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?
Here’s the good news: not all P&C companies have taken drastic action yet. Some are working hard to absorb these rising costs and keep premiums stable, at least for now.
The best course of action right now might be to stay put and work with your current insurer.
- Review your policy: Contact your agent and go over your coverage details. There might be opportunities to adjust your policy and lower your premiums without sacrificing essential coverage.
- Ask about discounts: See if you qualify for any discounts you weren’t previously aware of. Many companies offer discounts for things like good driving records, taking safety courses, or having multiple policies bundled together.
- Increase your deductible: This is a common way to lower your premium. However, be sure you have enough savings to cover a higher deductible comfortably in case of a claim.
Remember, we are your independent insurance agent. We have access to multiple 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 in the P&C market is undoubtedly frustrating for everyone. This is all the more reason to maintain a long-term perspective. Insurance companies are constantly analyzing data and adjusting their rates accordingly. Eventually, as the cost of repairs and claims stabilizes, the upward pressure on premiums should ease. In the meantime, focus on maximizing your current coverage and working with us to find any available savings. By sticking it out for now, you could find yourself in the best position when the market settles.