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Rising Costs of Insurance: Prioritizing Coverage Over Premiums

If you’ve looked at your home/auto/commercial insurance bill recently, you probably noticed an increase. For the first time in several years, we are in a hard market. That means insurance premiums are on the rise, and it’s important to understand why.

In 2022, inflation hit a 40-year high, resulting in nearly 10% increases across all industries, including insurance policies. Alongside this, there were at least 10 catastrophic events causing over a billion dollars in damage, leading to policyholders sharing the losses and experiencing an increase in rates.

The cost of claims has also increased due to over a 30% rise in building material costs since 2020, along with a similar increase in labor costs. Moreover, supply chain issues for vehicles are causing longer repair times, resulting in more expenses in storage fees and rental coverage.

Finally, more and more lawsuits are resulting in what are called “nuclear verdicts”, awarding policy limits more frequently than ever before.

So, what does this all mean as a consumer?

This is a nationwide/industry-wide issue. You can’t outrun it. Accept the fact that nearly everything in the world has increased in price, including your insurance premiums.

Talk with your agent and review your policy. Has a previous claim/ticket dropped off your record? Maybe your financial situation has improved, and you can afford a higher deductible.

Value for coverage. All insurance policies are not created equal. The saying, “cheap is rarely good, and good is rarely cheap,” holds true with insurance. Instead of focusing on the bottom dollar, focus on value. I often hear antiquated terms like “apples-to-apples”. That phrase is like nails on a chalkboard to me because it isn’t that simple. Sure, it sounds great, but the devil is in the details. Unless you’ve read the 100+ pages of coverage, you don’t know if you’re comparing apples-to-apples. Usually, it’s more like apples-to-kangaroos. While some may be tempted to settle for a watered-down policy for less premium, strive for the best value for your money.

Remember, the rising cost of insurance premiums is a reality, but we’re here to help. Prioritize value by receiving the best coverage for your premium and not settling for cut-rate insurance. Be proactive and review your policies with your agent before making a knee-jerk reaction that may cost far more than a premium increase. As the saying goes, “Insurance is like a parachute. You don’t need it until you do, and you want to be sure it’s there when you do need it.”

James Hazzard - Team
James Hazzard is the owner of Samuelson Insurance Agency in Portage, Indiana. With years of experience in the insurance industry and entrepreneurship, he aims to educate readers and clients on various insurance and entrepreneurial related topics to help them make informed decisions. Please note that the views expressed in James’ articles are his opinions and should not be considered professional advice.