Navigating a Hardening Insurance Market

Navigating a Hardening Insurance Market

October 14, 2022

It’s no secret that the nation’s economy has been struggling. Due a tough couple of years, we are now feeling the economic impact of external pressures such as covid, financial instability and natural disasters. These instabilities have also naturally impacted the insurance industry. There are several economic trends we are seeing that contribute to the increase in California homeowner insurance and California auto insurance rates.

During the pandemic, insurance companies saw a lull in active drivers. According to California department of transportation the number of daily car trips dropped by nearly half – 45%. As people have returned to work and school, roads are becoming more congested and more hazardous. Higher populated states such as California and New York have already reported an increase in accidents and fatalities.  As more accidents are taking place on the road combined with the slowing in auto manufacturing and supply chain complications there has been a huge increase in the cost and delays to repair or replace cars. As car prices increase due to supply chain issues, the cost to make repairs does too, and will ultimately impact policyholders’ rates.

Supply shortages are also affecting homeowners causing unprecedented changes to the housing and construction market on a national and global scale. As replacement costs increase, homeowner premiums are being impacted. These issues are further complicated by weather contributing to delays from natural disasters that we see taking place in our state or other parts of the country. In addition, with the rising costs of construction materials and labor, we have seen an increase in home remodeling and purchases. This is leading to a demand surge and worker shortages that further inflate prices. According to the National Mortgage News, there has been a 25% increase in construction permits globally.

On top of the supply chain issues that we see effecting everything, the cost of homeowners insurance is being impacted by other current events. Natural catastrophes, such as wildfires and hurricanes as well as surges in non-weather water damage are on the rise. The most common type of homeowner water damage claims has been due to home appliances and structural failures.  The United Nations has reported that Natural disasters occur at 3 times the rate that the did 50 years ago.   The California homeowner insurance companies and financial markets are trying to price in and model their claims predictions for the next 5-10 years so they can remain financially stable.

For some, we may be already feeling the effects that some of these national issues are causing. Right now, within the insurance industry we are finding it more and more imperative to take an active approach or you risk losing coverage all together. With the hardening market – homeowner insurance and auto insurance options are becoming more and more scarce for homeowners and California drivers. With that being said – there are ways to reduce your costs while maintaining the coverage you need.

Combining your home and auto policies to one insurance carrier is one of the easiest ways to lower your insurance rate. You maintain discounts on both your home and auto insurance policies. Increasing your deductibles is another easy way to lower your home and auto insurance premiums. By increasing your deductible to the next tier – you can save a few hundred dollars a year and reduce small frivolous claims that could cause you to lose your coverage down the road. When shopping for new home or auto Insurances options, carriers review claims history. By increasing your deductible and cutting out smaller claims – you guarantee yourself better future rates and expanded options in coverage. Call us to find out today.