If I were to pick out one of the most asked questions as an insurance agent, it would be: Why are my rates going up? There are several answers to that question.
The most frequent of these is weather related incidents. Catastrophic/weather related incidents.-Hurricanes and storms such as Ike and Harvey bring in billions of dollars worth of damage and just like any other business, they have to recoup their losses. Building materials also become very expensive because of the need for these materials greatly increases during destructive weather events. This also increases the price of materials which in turn makes the insurance premiums rise.
Auto/Home claims-If you get into accidents or fender benders often, these could lead to higher rates or even non-renewal. With the introduction of technology in cars, windshields have this tech embedded in the vehicle which increases the price for parts and such. Accidents also increase premium whether at fault or not at fault. The more frequent the accidents the higher of a liability risk the insurance company sees you as. Comprehensive claims do(windshield repair, hitting a deer) do not count as much against you.
Insurance Fraud is a huge reason why premiums rise. People filing fraudulent claims whether it be theft or an auto accident increases the need for fraud departments at insurance companies to investigate these fraudulent claims. These scam artists fake injuries and make false statements meaning bigger payouts and the insurance company in turn raises their rates. This takes time and money away from the company. Insurance companies have created fraud departments to investigate these claims and this costs money but especially it takes it out of the pockets of the other insureds.
If you live in an area that is prone for natural disasters, your rates will be high. Cities like Miami, Houston and New Orleans are known for storms and hurricanes which makes insurance spike. When living in a disaster prone area which as earthquakes (California) or massive windstorms such as Houston you will see that insurance is especially expensive in these areas due to natural disasters. Companies have even pulled out of areas because of heavy storm losses.
So what it comes down to is the frequency of claims, disaster prone area, fraud, inflation and technology top the list of why rates go up. Insurance is a business and will recoup their losses Companies will raise prices and limit coverage if they see that an area has severe weather issues. Dishonest and greed are also in the mix as people try to take advantage of a bad situation for their own personal gain.
Remember to always call your agent first regarding a claim. Every time you call in to the claims department, they will mark it on your record. Make sure when choosing a home that it’s not in a major flood zone or that it’s not in a catastrophic weather zone.