We hate to be the bearer of bad news, but, it’s safe to say that your auto and property insurance will increase this year. We’ve outlined everything you need to know before you receive your 2019 renewal.
Considering the impact this could have on your wallet, we wanted to make this confusing topic a bit more digestible. So, we’ve broken everything down into 4 simple questions you need to know the answers to.
WHAT is with the increase in cost?
Currently, insurance companies are experiencing significant losses, and because of this, they must make substantial changes to sustain profitability.
WHY is this happening?
Due to an increase in frequency and severity of losses, political involvement, and an overall difficult economic climate, we are currently experiencing a ‘hard market.’ This is caused by many factors, outlined below.
When you break it down it makes more sense:
- There are more vehicles on the roads.
- More people drive distracted due to technology, etc.
- There are more frequent and severe accidents.
- Repairing cars and rehabilitating those who sustain injuries become more expensive each year.
- There are more natural disasters (i.e. flooding) that impact property claims.
HOW will this affect you?
As we mentioned before, you can and should anticipate an increased cost of insurance this year. You may ask, “What if I haven’t had a claim,” unfortunately, the cost of your insurance will likely still increase.
It’s important to mention that Insurance Companies are being more selective and strict when it comes to rule enforcement (i.e. non-payment could result in immediate cancellation). It is imperative you understand the consequences of missing a payment because this could have serious repercussions.
WHEN will rates go back down?
This “hard market” has been projected to last upwards of 24 months, however, considering the current climate we really cannot say.
The bottom line is insurance companies must reduce their claim exposure in order to build a reserve, as they cannot pay claims if they don’t have the money to do so. That is why they need to increase premiums and lower claim payments until their reserve has been built up again.