The property & casualty insurance landscape in the United States has significantly changed in recent years. Housing inflation, higher labor and material costs, and climate-related events have all contributed to rising insurance premiums. Understanding these changes and how to respond can help you better manage your insurance costs.
The Changing Insurance Landscape
The value of homes and the costs to rebuild or repair them have surged due to housing inflation and required upgrades to meet modern building codes. Climate-related events such as hurricanes, wildfires, and tornadoes have also resulted in higher-than-expected claims, further driving up insurance costs.
Auto Insurance Trends
Auto insurance prices have also been on the rise. Newer internal combustion engine (ICE) vehicles are becoming more sophisticated, incorporating larger numbers of semiconductors and advanced systems. Electric cars, while innovative, have proven to be about 12% more expensive to repair than ICE cars. Their design, often integrating the battery pack into the chassis, makes them more likely to be “totaled” after an accident.
Insurance Carrier Adjustments
These factors have forced many property & casualty insurance carriers to rethink their pricing and risk management strategies. Insurers are increasing premiums and sometimes opting not to renew existing policies to manage the additional costs and risks. If your premiums dramatically increased, here are some steps to consider.
Steps to Manage Your Insurance Costs
1. Review Your Situation
Evaluate why your rates have increased. Check for any at-fault incidents, the use of different insurance companies for various coverages, or specific risk factors related to your property. Sometimes, rate increases are due to the claims experience of the insurance carrier rather than anything you have done.
2. Understand Your Current Policies
Ensure you have adequate home, auto, and umbrella coverage. Understanding the details of your policies can help you determine if you have the right types and amounts of insurance.
3. Explore Cost-Saving Measures
Contact your insurance carrier to discuss ways to lower your costs. Increasing your deductibles can reduce premiums by ensuring claims are made only for higher-cost events. Bundling your policies, installing safety equipment, and changing your home or car can also qualify you for discounts. A licensed insurance agent can help you identify all possible discounts.
4. Compare Quotes
If your revised quote is still too high, seek recommendations from neighbors or friends in your area. They may have positive experiences with other insurance providers. Be prepared to invest time working with a new agent to get quotes and determine if a change is beneficial.
How Financial Advisors Can Help with Risk Management and Insurance Reviews
Rising property & casualty insurance costs are challenging for many homeowners and vehicle owners. By understanding the factors driving these increases and taking proactive steps, you can manage your premiums more effectively. Contact your insurance carrier or a licensed agent to explore your options and ensure you have the best coverage at a reasonable cost.
At Mission Wealth, we offer our clients asset protection, risk management, and insurance reviews that can assist in determining the amount of coverage, pricing, and other factors included in reviewing your policies. Contact us today for a free consultation and ask about our Wealth Strategy Team services.
This article is not intended to provide any specific financial planning advice. Advisory services are only offered to clients or prospective clients where Mission Wealth and its representatives are properly licensed or exempt from licensure. Consult an insurance carrier or licensed agent for specific advice.
Mission Wealth is a Registered Investment Adviser. This commentary reflects the personal opinions, viewpoints, and analyses of the Mission Wealth employees providing such comments. It should not be regarded as a description of advisory services provided by Mission Wealth or performance returns of any Mission Wealth client. The views reflected in the commentary are subject to change at any time without notice. Nothing in this commentary constitutes investment advice, performance data, or any recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Mission Wealth manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.
MISSION WEALTH IS A REGISTERED INVESTMENT ADVISORY FIRM. 00609216 07/24
