If you’ve paid attention to prices over the past year, you’ve noticed every single product or service is more expensive. From eggs at the grocery store to tires for your vehicle, prices are seemingly setting new record highs every single month.
Unfortunately, insurance is no exception. If you opened your last auto, home, or business premium, you may have noticed a jump in price from the previous term. Let me give you an insider's look into why this is happening and what you can do about it.
If you are in an auto accident that totals your car, the price to replace your vehicle is significantly higher. The average used car is 35% more expensive than before the COVID pandemic thanks to easy money policies and limited vehicle supply. This means insurance carriers are forced to charge customers more to protect the exact same vehicle in case of an accident.
An under-reported element of the pandemic that is still being felt today are supply chain constraints. If you are in an auto accident that only requires a minor repair, body shops are often charging a premium for the parts since the supply chain supporting them are still backed up. Often times this requires additional time required in a rental vehicle resulting in an added cost that insurance companies are passing on to the end customer.
Increased labor costs and material costs have forced insurance companies to increase the premiums for many businesses as well. As the replacement costs to protect brick-and-mortar stores or expensive pieces of machinery go up, insurance companies are simply passing the cost onto the business owner
If you’re a homeowner who purchased before the COVID real estate boom, you’ve likely seen your home value skyrocket. This is fantastic news for your net worth but has likely increased the cost of your insurance premium to cover your home in case of a total loss.
The bottom line is that insurance is more expensive now than it was before the pandemic. Sadly, this is forcing some people to seek state minimum (or bare minimum) coverages in an attempt to cut costs at the expense of the coverages they carry. This is possibly the worst mistake an individual or business can make. In the event of a total loss - whether it is your home, vehicle, or business - failing to have sufficient coverage can result in a worst-case scenario that can leave you owing huge sums of money.
The other group of people that are being hit the hardest are the ones locked into a captive agent or an individual insurance company. In short, agents who can only quote from one insurance carrier are significantly less likely to offer you the right coverage at the right price since they only have one option to choose from.