The claims process can be difficult to navigate, especially when the insurance company is throwing around terms you’ve never heard.
Here’s a breakdown of some of the common terms relating to insurance claims:
An adjuster is the trained claim representative assigned to help you if you file a claim. They’ll examine the damage to your covered property and review your policy to determine what coverage you have. The adjuster is also responsible for issuing payment for your claim.
Actual Cash Value (ACV)
Actual Cash Value (ACV) coverage takes depreciation into account at the time of the loss. If you have ACV coverage, your policy won’t pay to replace what is damaged. Instead they will pay the depreciated value, which subtracts for age and condition. ACV is calculated by subtracting depreciation from the replacement cost.
Many items lose value over time due to age, wear and tear and the manufacturing of newer and better products. That reduction in value is known as the depreciation. Cars are notorious for depreciating as soon as they are driven off the lot, but many household items also depreciate.
The cost to actually replace a lost or damaged item, regardless of age and condition at the time of loss. For example, if you bought a TV 10 years ago for $300 but it costs $700 to buy a comparable TV today, Replacement Cost coverage would pay the full $700 to replace the TV if you had a covered loss.
Your deductible is the amount you have to pay before your insurance company will payout for a claim. The insurance company will generally subtract the deductible from the total payout.
If you have a $1,000 deductible and had a claim for $4,000, the insurance company would issue payment for $3,000 and you’d be responsible for the other $1,000.
The dollar limits for each coverage on your specific policy. The policy limits are the maximum amount your policy will pay out under each coverage for a loss. Many policies also have “sublimits” for certain classes of property, like jewelry, coins, or other valuables.
If someone else is responsible for causing damage to your property, your policy may pay for the damage and then seek reimbursement from the responsible party. If the insurance company has received reimbursement, you may get some or all of your deductible back.
When there’s a catastrophe, like a fire or hail storm, the likelihood of contractor fraud increases immensely. Here are some tips for picking a reputable contractor and avoiding fraud.
1. Only work with contractors that are licensed
Colorado doesn’t require contractors to be licensed on the state level, so don’t assume that every contractor you encounter has a license. Many counties and cities have specific requirements, but not all local governments require contractors to be licensed.
Licensed contractors are required to have a certain amount of experience and pass an exam. That helps ensure they are qualified in their field.
If your contractor isn’t insured, you could be responsible for any injuries that occur while they’re working on your property. Request a Certificate of Insurance from any contractors you’re considering to verify their coverage.
3. Work with local contractors when you can
Local contractors have a better idea of the rules and regulations in your area. Not only does that help ensure work is done to code, but it also speeds up the process. If you hire a contractor from another state, there’s a chance you could be waiting longer for them to get permits pulled and inspections done.
A contractor that is local is also less likely to take payment and leave town without completing the work. If you have any issues with the work done, you can often get a local contractor to come back and fix it whereas someone from out of town might leave you high and dry.
4. Check references and reviews
If multiple people have complaints about their experience with a specific contractor, there’s a good chance you’ll also have issues with them. But if you find glowing reviews online and get good references for them, you’ll likely have a better experience.
5. Don’t get pressured into making a hasty decision
You don’t have to sign a contract immediately. Take your time, gets bids from multiple contractors, and make sure you understand the contract before you sign it. If you’re being pressured to sign something on the spot, that might not be a contractor you want to work with.
6. Get everything in writing
According to Travelers, the contract should include:
A detailed description of the work to be completed and the price of each item.
A payment schedule – for example: one-half down and one-third when work is partially completed, and the balance due upon completion of repairs.
The estimated start date and completion date on larger projects.
Any applicable guarantees, which should be written into the contract and clearly state what is guaranteed, who is responsible for the guarantee, and how long the guarantee is valid.
Signatures from both parties. You should never sign a contract containing blank sections.
7. Don’t pay in full for incomplete work up-front
Paying up-front increases the risk of a fraudulent contractor taking your money without completing the work. It also opens the door to poor workmanship and cutting corners because they don’t have to meet certain expectations in order to get paid.
When paying a contractor, pay by check rather than cash. Make the check out to the company rather than an individual.
8. Keep all records together in a safe place
Any paperwork you receive regarding the job should be kept together. Then if you need to reference anything you can find it. It also helps your case if there are any disputes.
This can include anything from the contract, any changes to the contract, estimates, invoices, certificates of insurance, correspondence, etc.
9. If you’re filing a home claim, file it and talk to your adjuster before starting on any work
If you’re repairing your home because of a loss that might be covered by insurance, make sure you file a claim before starting any work.
The insurance company needs to verify coverage before they can approve a claim. If you begin the repairs before an adjuster reviews the damage, your claim could be declined.
10. Report any suspected fraud
You can call local law enforcement, the National Insurance Crime Bureau 1-800-TEL-NICB, or FEMA disaster fraud hotline 1-866-720-5721 to report any suspected fraud.
Hiring a contractor checklist and tips. Travelers Insurance. (n.d.). Retrieved April 28, 2022, from https://www.travelers.com/resources/home/renovation/checklist-for-hiring-the-right-contractor
Colorado general contractor license and Insurance Requirements. Next Insurance. (2021, December 15). Retrieved April 28, 2022, from https://www.nextinsurance.com/blog/colorado-general-contractor-license-and-insurance-requirements/
In the insurance industry, a “catastrophe” is a disaster that is unusually severe and meets or exceeds a loss threshold. As of December, 2021, the current dollar threshold to declare an event a catastrophe is $25 Million, according to Insurance Information Institute. Some examples of catastrophic events include tornadoes, hailstorms, high wind, flooding, hurricanes and wildfires.
Colorado does see some flooding and tornadoes, but the largest losses come from wildfires and hailstorms. Colorado has the 3rd highest wildfire risk in the US and had the 2nd most hail claims filed between 2018-2020.
Insurance Information Institute reported that as of October, 2021, Colorado has 373,900 properties with “high to extreme wildfire risk.” That makes up 17% of the properties in the state. With so many properties at risk of being damaged or destroyed by wildfire, insurance companies have to plan accordingly.
Colorado’s highest catastrophic payouts since 2017:
May 8, 2017 Denver Metro Hailstorm: $2.3 Billion
2018 Front Range & CO Springs Top 3 Hailstorms: $276.4 Million, $169 Million, $172.8 Million
2020 East Troublesome Fire: $543 Million
2021 Marshall Fire: Over 1000 structures destroyed and estimated $1 Billion in damages
The high wildfire risk in Colorado means higher rates across the state. But insurance companies charge more for insurance on homes that have the highest risk. They do this by assigning each property a Protection Class (PC) or Brushfire Score, which determines the risk of fire and the responding fire department’s ease of access and resources. The higher the PC or Brushfire Score, the higher the premium charged to insure that property.
Hail has been a problem in Colorado for as long as I can remember, but the number and severity of claims have increased significantly over the past decade. Part of that is due to the increasing population in the state. The more homes that are built on the Front Range, the more targets there are for hail to hit.
Between January 1, 2017 and December 31, 2019, Denver and Colorado Springs were in the top 5 cities for hail losses, with Denver at #2 and Colorado Springs at #3, according to an Insurance Journal article. Insurance companies in Colorado pay out hundreds of millions, if not over a billion dollars for hail damage every single year. Most companies have higher deductibles for wind and hail losses to help mitigate the risk. They also have to charge an adequate amount for both auto and home insurance.
2. Traffic Accidents
There are three major factors causing the number and severity of traffic accidents to rise in Colorado: Booming Population, Impaired Driving, and Distracted Driving.
It’s no secret that the population in Colorado is increasing at a rapid rate. According to U.S. News, the 2020 Census showed that Colorado was 6th fastest-growing state from 2010-2020, with a 14.8% growth. Unfortunately, traffic infrastructure has not kept pace with the population growth, leaving many roads on the front range gridlocked more frequently than not. More cars on the road directly correlates with accident frequency.
In addition to the heavier traffic, dangerous driving activities are becoming more common. Nearly everyone has a smart phone, and most people don’t put their phone on “Do Not Disturb” when they get behind the wheel. Distracted driving can include anything that takes focus away from the road, including texting, talking on the phone, eating, reading, and more.
91% of participants reported driving distracted in the past seven days. 54% admitted to reading a message on their phones. Nearly 50% talked on a cell phone while driving. 41% sent a message while driving.
CDOT also reported that in 2020, 10,166 crashes in Colorado involved distracted drivers. Those accidents caused 1,476 injuries and 68 deaths.
Impaired driving is also contributing to more severe and frequent accidents. The total number of fatal crashes has increased by 37% from 2011 to 2021. Fatalities involving drivers that tested positive for drugs increased by 39.3% from 2015 to 2019. Drivers with a BAC over the legal limit were involved in 8.6% more fatal accidents during that same time.
From 2020 to 2021, the number of DUIs involving marijuana went up by 48%. While not all DUI incidents end in an accident, the increase in risky driving behavior certainly impacts the frequency of crashes.
With impaired and distracted driving causing more crashes, injuries and fatalities, insurance companies are paying out more for auto claims in Colorado. Higher medical costs are also impacting the higher payouts for auto accidents. Berkley Accident and Health reported that treatment costs increased by 6% in 2020 and another 7% in 2021.
Unfortunately when accident frequency and severity increases, we all pay the price. The more insurance companies pay out in claims, the more rate increases they are forced to take in order to remain solvent in the state.
3. Supply Shortages
There have been worldwide supply shortages since the pandemic started in 2020, which have led to inflated prices across most industries. Since the materials for home construction and auto parts are more expensive, insurance payouts are also inflated.
Auto Part Shortages
According to the Consumer Price Index, the cost of auto parts have increased by 14.2% from March 2021-March 2022. Insurance companies generally consider a vehicle a total loss if it will cost more than 70% of the vehicles value to repair the damage. That means more cars are being totaled because of the inflated repair costs.
Both new and used cars are also much more expensive than they were a few years ago. Supply chain disruptions have made it harder for manufacturers to produce enough new vehicles. There were 7.7 Million fewer vehicles produced in 2021, largely due to the microchip shortages. The shortfall of new vehicles directly impacts the price of used vehicles.
As the values of used vehicles increase, the payouts for total losses get higher. With insurance companies paying out more, the cost of insurance also goes up.
Building Material Shortages
On top of the rising costs impacting auto insurance, the costs of building materials have also soared because of supply chain shortages. Lumber prices jumped 42% in the first year of the pandemic, and steel mill products rose 81% in the first three quarters of 2021. Throughout 2021, the price of materials for new construction increased by over 18%.
The inflated cost of materials alone has led to much higher prices for rebuilding homes that have been damaged. Just like with auto insurance, higher home claim payouts leads to home premium increases.
On home policies, insurance companies are increasing rates to keep up with the amount they are paying out for claims but premiums are also rising due to higher coverage amounts. Since it costs more to rebuild a home, the amount of coverage you have on your home policy is likely also increasing.
You may have been able to rebuild your home for $150/square foot 4 or 5 years ago, but now it might cost closer to $275/square foot. As a result, your dwelling coverage (Coverage A) needs to increase to ensure your home is properly insured.
Many homeowners found out they were underinsured after the Marshall Fire, which is largely due to the rapid inflation seen in the past several years. If you haven’t review your home coverage with a licensed agent recently, I highly recommend you do. There’s a good chance that if your policy was written more than a year ago, you don’t have enough coverage to rebuild your whole home.
You can walk into almost any business and see a “Help Wanted” sign on the door. It’s no secret that there are labor shortages across most industries. The shortage of workers has directly impacted the supply shortages, but even when the supplies are available many industries don’t have enough people to actually do the work.
Auto Technician Shortages
There’s currently a deficit of trained auto technicians to work on repairing damaged vehicles. To keep up with demand, there needs to be 3 times as many qualified technicians. The shortfall of auto technicians is causing higher auto repair costs and longer repair times.
When it takes longer to repair a vehicle, the insurance companies end up paying for a rental car for longer which also increases the claim payout amount.
Skilled Construction Labor Shortages
When it comes to home construction, there’s a shortfall of at least 200,000 skilled trade workers. That has led to more expensive bids for both home repairs and new construction. Not only are skilled workers charging more for their labor, but the amount insurance companies are paying for Additional Living Expenses is much higher.
Most home policies come with coverage for Additional Living Expenses, so if you can’t live in your home due to a covered loss they will pay for the additional expenses you incur as a result. That includes a hotel or long-term rental, restaurant expenses if you don’t have a kitchen to cook in, dry cleaning bills if you don’t have access to a washer and dryer, and more. If takes 6 months longer to rebuilt your home after a loss, the insurance company is paying those expenses for longer.
At the end of the day, the amount insurance companies pay out for claims directly impacts the amount they charge for insurance. All of the reasons listed above are causing insurance companies to pay out more than they have in the past. As a result, the cost of auto and home insurance are increasing accordingly.
Boyd, S. (2021, January 29). Marijuana Dui Arrests Up 48% In Last Year Across Colorado. CBS Denver. Retrieved April 13, 2022, from https://denver.cbslocal.com/2021/01/29/marijuana-dui-colorado-arrests-alcohol/
Catastrophe Facts & Statistics. RMIIA. (n.d.). Retrieved April 13, 2022, from http://www.rmiia.org/catastrophes_and_statistics/catastrophes.asp#:~:text=The%20most%20destructive%20wildfire%20in,and%20auto%20insurance%20claims%20filed
Davis Jr., E. (2021, April 28). 2020 census shows America’s fastest-growing states | best … U.S. News & World Report. Retrieved April 13, 2022, from https://www.usnews.com/news/best-states/slideshows/these-are-the-10-fastest-growing-states-in-america
Distracted driving. Colorado Department of Transportation. (2022, April 4). Retrieved April 13, 2022, from https://www.codot.gov/safety/distracteddriving
Facts + Statistics: Wildfires. Insurance Information Institute. (n.d.). Retrieved April 13, 2022, from https://www.iii.org/fact-statistic/facts-statistics-wildfires
Spotlight on: Catastrophes – Insurance Issues. Insurance Information Institute. (2021, December 13). Retrieved April 13, 2022, from https://www.iii.org/article/spotlight-on-catastrophes-insurance-issues
Top states, cities for insurance claims for hail damage. Insurance Journal. (2020, April 28). Retrieved April 13, 2022, from https://www.insurancejournal.com/news/national/2020/04/28/566579.htm
U.S. Bureau of Labor Statistics. (2022, April 12). Table 7. consumer price index for all urban consumers (CPI-U): U.S. city average, by expenditure category, 12-month analysis table – 2022 M03 results. U.S. Bureau of Labor Statistics. Retrieved April 13, 2022, from https://www.bls.gov/news.release/cpi.t07.htm
Unni, C. (2021, November 29). The Pandemic’s Lasting Effects: Medical Costs Projected to Rise 6.5% in 2022. Berkley Accident and Health. Retrieved April 13, 2022, from https://www.berkleyah.com/the-pandemics-lasting-effects-medical-costs-projected-to-rise-6-5-in-2022/
You share a lease and a home with your roommate, but should you share a renters policy? The majority of the time, the answer is no.
Typically, a renters policy is designed to only cover one “household,” which is the owner of the policy and their family members. Unless your roommate is a relative, they don’t count as an “insured” on most renters policies.
Many insurance companies won’t allow a non-family member to be added on a renters policy, so it’s often not an option to share a policy. That being said, there are some insurance companies that will allow you to add a roommate to your policy. While it may seem like a good idea to save some money by splitting the cost of one policy, there are some other factors to consider.
For one, if your roommate has a claim that doesn’t effect you, it’s still on your policy and that will follow you for 5 years. Even if there is a claim that impacts you both, like a fire, there can be complications when it comes to splitting the claim payment. You wouldn’t each get separate checks to replace your belongings, you’d get one check with both of your names on it. So you should consider how well you know and trust your roommate when it comes to money.
That also brings up the matter of how to split a claim payment. Do you split it 50/50? What if one of you owns more of the furniture? Or if one has more expensive items than the other? Those are all things to discuss before agreeing to share a renters policy with a roommate.
If you’re the one being added to your roommates policy, there’s the risk that they could forget to pay the bill and leave you both uninsured. I highly recommend being the primary policyholder if you are going to share a policy, that way you know it’s paid and active and there haven’t been any changes made behind your back.
Another thing to keep in mind is whether or not your roommate is going to be around long-term. If you move every year, or tend to cycle through roommates frequently, it might not make sense to include your roommate on your policy.
Considering renters insurance is relatively inexpensive, often less than $200 per year, the amount you can save by sharing a renters policy with a roommate may not be worth the risk. You might save $100 per year, but if your roommate files a claim and your future rates increase because of it, you could easily pay back any potential savings.
At Integrity First Insurance, we focus on helping our clients understand their insurance and find the right coverage for their needs. If you have any questions about how renters insurance works or who should be on your policy, email or call us today.
After the Marshall Fire tore through entire neighborhoods in Superior and Louisville, many people are worried about their home insurance. There have been countless reports of families whose home insurance was too low to rebuild their home. Not only did they lose their home, their belongings, and their sense of normalcy, now they are frantically trying to figure out how they will afford to rebuild.
That raises the question, how do you know if you have enough coverage? After all, you pay for insurance so you can be made whole again if disaster strikes. And what good is a policy that leaves you with only half a home after a fire?
How much home insurance is enough?
Many homeowners are concerned when the dwelling limit is lower than the amount they could sell their home for. Remember, an insurance company is never going to sell your home, just rebuild it. You should insure your home for the amount it would cost to rebuild your home. Not what the real estate market estimates it is worth.
How do you know if you have enough home insurance?
Insurance companies use a Replacement Cost Estimator (RCE) to determine the estimated cost to rebuild a home in the event of a total loss. When filling out the RCE, we can get very specific with the details in the home.
The RCE will factor in things like square footage, the foundation (basement, slab, etc.), the number of bathrooms, and the finishes in the home, like flooring, counters and cabinets. For homes with higher end finishes, we can go even more in-depth. We can input the light fixtures, crown or base molding, and special features like theatre rooms, built-in speakers, wet bars, and wine cellars.
That being said, the RCE is only an estimate and the costs of labor and materials are constantly changing. The actual cost to rebuild your home may even change over an annual policy term. For example, when COVID-19 hit, the cost of lumber skyrocketed. So it now costs more to rebuild a home than it did before the pandemic.
To account for inflation and increasing construction costs, we recommend Extended Dwelling Coverage. Extended Dwelling Coverage provides an additional percentage of your dwelling limit. It’s usually either an extra 25% or 50% (some carriers even offer 100%), which can extend if there is a loss.
Example: Your dwelling limit is $300,000 and you have 50% of Extended Dwelling Coverage. If there was a significant loss to your home you’d have up to an extra $150,000 to cover any costs that exceed your $300,000 dwelling limit.
Your home has to be correctly insured for the Extended Dwelling Coverage to extend. You can’t underinsure your home and then count on the additional percentage of coverage to fill that gap. That’s why it’s important to notify your agent if you make any significant changes to the home. If you finish the basement or upgrade your kitchen or bathroom, you need to update the RCE.
Debris removal is a cost that people often overlook.
Most policies include coverage to remove the debris after a loss. The cost of debris removal can be significant.
Many counties have an ordinance that requires demolition when a certain percentage of the home is damaged, usually 60% or more. So even if there are parts that are salvageable, the whole thing might need to be rebuilt. In cases like this, your dwelling value isn’t only covering the rebuilding of your home. It’s also covering the demolition of the undamaged portion of your home and the cost of hauling away that debris.
Are your belongings covered?
Most homeowners policies also include coverage for your personal property. So if your house were to burn down, or be impacted by another covered loss, you won’t be on your own to replace your belongings.
The majority of policies default to Actual Cash Value settlement for personal property. That means if your belongings were damaged or destroyed in a loss, your claim payout would be the original value minus depreciation for age and wear & tear. That’s not going to go very far when it comes to replacing your things.
I highly recommend purchasing Replacement Cost coverage for your personal property, if available. With Replacement Cost, you’ll be given the full cost to actually replace an item rather than the depreciated value.
If you have any high value items or collections, it may be beneficial to schedule those on your policy to ensure you receive the full value if there is a loss.
Create a home inventory to keep track of your belongings
One way to account for the personal property you have in your home is to fill out a Home Inventory Checklist. If you’re prepared with a home inventory, it can help make things go more smoothly if disaster strikes and you have to replace everything.
What happens if you can’t stay in your home after a loss?
If your home becomes uninhabitable due to a covered loss, your homeowners policy will pay for the additional living expenses you incur. You would continue paying your normal expenses, like your mortgage and property taxes, and your policy would pay for the extra costs that arise as a result of your claim. That can include paying for a hotel or long-term rental, restaurant bills if you’re unable to cook in the hotel, laundromat costs, etc.
This coverage is typically called Loss of Use or Additional Living Expenses. The limit of coverage could either be a set dollar amount (like 20% of the dwelling limit) or an amount of time (12 or 24 months). It’s important to have an adequate limit because if your home is a total loss it can take a significant amount of time to rebuild.
Some policies offer “walkaway” coverage
If you lost your home to a fire that burned your entire neighborhood, you might wish you didn’t have to rebuild in that area. That’s especially true if you chose your location based on the surroundings and the scenery. After a fire, there’s probably not much natural beauty to look at.
Most home policies will only pay replacement cost once your home has been rebuilt. There are a few select insurance carriers that offer replacement cost coverage up front if the home is deemed a total loss. That equates to “walkaway” coverage because you can take the payment and go build or buy elsewhere.
Keep in mind the policy isn’t going to pay what your home would have sold for prior to the loss, it will only pay what it would cost to rebuild your home.
Do you feel confident your policy has coverage you need if your home burned down? If not, give us a call today. Our agents are committed to providing specialized coverage for each individual or family’s needs.
Across the insurance industry, rates are expected to increase even more this year than they have in recent years. While annual increases are becoming the norm, the jump may be more drastic in 2022.
There are many factors that are driving insurance costs up. Claim payouts are higher than ever, and natural disasters and car accidents are becoming more frequent. Combine that with supply chain issues and labor shortages, and you have the unprecedented market we’re currently in.
Building material costs are at an all-time high
With global supply chain issues and labor shortages, prices for many products have soared over the past few years. Building materials are no exception.
During the first year of the pandemic, the cost of lumber jumped up by 42%. The prices have fluctuated since, but aren’t back to the pre-pandemic prices. In the first three quarters of 2021, steel mill products rose in cost by 81%.
There’s also currently a shortage of at least 200,000 skilled trade workers. 60% of surveyed builders are reporting labor shortages and the vast majority of them don’t expect that problem to go away in the next 6 months.
Price increases from December 2020 – December 2021:
Floor Coverings 3.9% Window Coverings 8% Major Appliances 6% Overall Construction Supplies 18.4%
All of these factors have led to more expensive construction projects for both home repairs and new construction.
Home claims are rising in both severity and frequency
Catastrophic home claims are no longer few and far between, they seem to be happening every other week somewhere in the country.
In 2021, there were 20 natural disasters with losses exceeding $1Billion in the US alone. From 1980-2021 the annual average is 7.4 events, but the annual average in the past 5 years is 17.2 events.
Many scientists and experts attribute the increased frequency of disastrous events to climate change. As our weather and climate changes, severe weather events are becoming more common and severe.
Between the increased frequency and severity of home claims and the higher cost of building materials, home insurance prices will continue to increase. The chances that you’ll need to file a claim on your home are higher, and it will cost even more to repair or rebuild your home than it has previously.
Supply chain disruptions are causing costly shortages
Supply chain issues are impacting many different industries, including auto production. 7.7 Million fewer vehicles were produced in 2021 due to supply chain complications.
One of the most impactful shortages has been microchips that are used in vehicles. With most vehicles containing higher levels of technology than ever before, it’s been difficult for manufacturers to keep up with demand.
Because of the microchip shortage, there’s a shortfall of new vehicles on the market, which has driven up the cost of used vehicles.
Price increases from December 2020 – December 2021:
New Vehicles 11.8% Used Vehicles 37.3%
Many rental car companies sold a large portion of their vehicles in order to survive during the pandemic. Once travel increased again over the summer of 2021, they had to restock their fleet of vehicles. With fewer new vehicles on the market due, they turned to used vehicles.
Around the same time, consumers who had extra money from stimulus checks also began shopping for new and used cars. The combination of that and the rental car companies drove the prices of used vehicles up significantly in June. Those prices remained inflated through the end of 2021 and aren’t expected to drop anytime soon.
The cost to repair vehicles keeps rising
In addition to the microchips, there are also supply chain issues impacting wiring harnesses, plastics, and glass used by auto manufacturers. As a result, the cost to repair vehicles is up around 20% and the cost of auto parts is up 6%.
Similar to the skilled labor shortage seen in the construction industry, there’s also a need for 3 times as many trained auto technicians. The delays in obtaining auto parts and the lack of skilled technicians to complete the repairs have made auto repairs take significantly longer.
With cars being stuck in the shop for longer than usual, that takes up even more of the rental car market. People are needing rental cars for longer, and they are harder to find. That drives the cost of rental cars up and exhausts the car insurance coverage limits faster.
Driving has returned to pre-pandemic levels
At the beginning of the pandemic there were fewer drivers on the roads and there were fewer accidents as a result. During that time, many insurance companies decreased premiums and offered credits or refunds.
In 2021, however, we saw a return to pre-pandemic driving levels and a rise in the number and severity of accidents. Insurance companies found themselves with underpriced policies, which is causing them to now increase rates to keep up with the high claim payouts.
If you’d like to discuss your insurance options or get a proposal, give us a call today. We’re here to help!
Semiconductor shortages to cost the auto industry billions. AlixPartners. (2021, September 23). Retrieved January 27, 2022, from https://www.alixpartners.com/media-center/press-releases/press-release-shortages-related-to-semiconductors-to-cost-the-auto-industry-210-billion-in-revenues-this-year-says-new-alixpartners-forecast/
Smith, A. B. (2022, January 24). 2021 U.S. billion-dollar weather and climate disasters in historical context. 2021 U.S. billion-dollar weather and climate disasters in historical context | NOAA Climate.gov. Retrieved January 27, 2022, from https://www.climate.gov/news-features/blogs/beyond-data/2021-us-billion-dollar-weather-and-climate-disasters-historical
U.S. Bureau of Labor Statistics. (2022, January 12). Table 2. consumer price index for all urban consumers (CPI-U): U. S. city average, by detailed expenditure Category – 2021 M12 results. U.S. Bureau of Labor Statistics. Retrieved January 27, 2022, from https://www.bls.gov/news.release/cpi.t02.htm
When determining the cost to insure specific vehicles, insurance companies look at multiple factors. First, they review the claim payouts for similar vehicles. Not only what it costs to repair damage to that vehicle, but also the liability payouts associated with it. If that model of car has caused significant liability payouts, it’s more likely to cause damage or injuries in an accident.
Cars with advanced technology and safety features are a bit of a Catch-22. They make a car safer and less likely to get in an accident, but they cost more to repair. So in the end it could be a wash when it comes to the cost of insurance.
Each person driving the same model of car won’t be paying the same amount to insure it. That’s because there are more factors that go into the cost than just the car itself. In addition to the features of the car, each driver on the policy plays into the cost to insure a vehicle. Your driving record, garaging location, credit and claim history impact how much you’ll pay to insure your vehicle.
According to Forbes, these are some of the most and least expensive vehicles to insure among popular 2021 vehicle models.
What types of cars are the most expensive to insure?
Sports cars- Sports cars tend to be more expensive to insure. They are built for speed, which can often lead to risky driving behaviors and accidents.
Luxury Vehicles- The parts needed to repair luxury cars can be hard to find and have a higher price tag. As a result, these cars are on the more expensive side when it comes to insurance.
Electric Vehicles- Some of the components that make up an electric vehicle cost a lot to replace. For example, a battery alone can cost thousands of dollars. As a result, the repair costs after an accident can be extreme.
Large Vehicles- Cars with larger bodies can often cause more damage in an accident than smaller cars. That makes the cost of liability insurance higher.
What makes some cars more expensive to insure?
The value of the car
Cars that have specialty parts or complex engines
Technology, like backup cameras, automatic braking, GPS, etc.
Rate of theft- cars that are more likely to be stolen cost more to insure
More horsepower- vehicles that have higher horsepower make liability risks higher
If you’re considering switching cars, it can be helpful to consider the insurance costs before you make a final decision. The payments for your dream car might fit into your budget, but the price to insure it could break the bank. You can get a quote for the cars you’re considering ahead of time to see how they would impact your auto policy.
Danise, A. (2022, January 11). Most and least expensive cars to insure 2022. Forbes. Retrieved January 17, 2022, from https://www.forbes.com/advisor/car-insurance/most-least-expensive-cars-to-insure/
Research, H. A. (2021, November 29). What are the most expensive cars to insure? Car and Driver. Retrieved January 17, 2022, from https://www.caranddriver.com/car-insurance/a37169944/most-expensive-cars-to-insure/
We all hope we’ll never have to file an insurance claim on our home, but the recent fire in Superior and Louisville was a reminder that bad things can happen in an instant. If you’re prepared with a home inventory, it can help make things go more smoothly if disaster strikes and you have to replace everything.
One simple way to create an inventory of your belongings is to do a video walk through of your home. Press record on your cell phone or camera and walk from room to room panning over your belongings. You can narrate what you’re looking at and open any cupboards or drawers where valuables might be kept. Once you have a video of your possessions, be sure to upload it to cloud storage or email it to yourself or someone you trust to ensure you can still access it if something happens to your phone or camera.
Another option is to fill out a Home Inventory Checklist. If you want a more itemized list that you can easily add and remove items from, you can download an app to help you create an inventory. Some options include Home Contents or Everspruce. Both apps have a free version, or you can elect to pay a fee to unlock additional features.
Pick an easy spot to start – A contained area—like your small kitchen appliance cabinet, your sporting equipment closet or your handbag shelf—is a great place to get started.
List recent purchases – Another way to start is with recent purchases—get into the inventory habit and then go back tackle your older possessions.
Include the basic information – In general, describe each item you record, and note where you bought it, the make and model, what you paid and any other detail that might help in the event you need to make a claim.
Count clothing by general category – For example, “5 pairs of jeans, 3 pairs of sneakers…” Make note of any items that are especially valuable.
Record serial numbers – Usually found on the back or bottom of major appliances and electronic equipment, serial numbers are a useful reference.
Check coverage on big ticket items – Jewelry, art and collectibles may have increased in value and may need special coverage separate from your standard homeowners insurance policy. While you’re making your home inventory list, check with your agent to make sure you have adequate insurance for these items before there is a loss.
Keep proof of value – Store sales receipts, purchase contracts, and appraisals with your list.
Add significant new purchases to your list – Make it a habit to add the item information and receipts to your inventory while the details are fresh in your mind.
Store a copy of your paper inventory outside the home – Keep it—along with applicable receipts and appraisals—in a safe deposit box or at a friend’s or relative’s home. Make at least one backup copy of your inventory document and store it separately. An easy way to make digital backup copies of your paper list is to take pictures of it on your smartphone.
How to create a home inventory. (n.d.). Retrieved April 19, 2021, from https://www.iii.org/article/how-create-home-inventory
You keep your home stocked with supplies to use in case of emergency. (Right?)
What about your car?
During winter, extreme weather and road conditions can lead to all kinds of trouble when you’re traveling — crashes, getting stuck, getting lost. And cold temperatures make those situations even more dangerous than usual. So keep a stockpile of emergency items in your car, just like your house. In the best-case scenarios, you’ll never have to use them, or they’ll just help keep you comfortable for an hour or so while you wait for a tow truck. But if you’re ever caught in a truly sticky situation, you might need them to do something more — like keep you alive.
The folks at Wisconsin’s Emergency Management agency are quite familiar with the perils of winter travel, as you can imagine. So don’t just take our word for it — here are some of the things they recommend you keep in your car to help keep you safe should you run into trouble on the roads in the snow and ice.
A shovel, tire chains, tow rope and sand or cat litter: All of these can help you get your car unstuck.
A windshield scraper: Preferably one with a brush attached.
Blankets, sleeping bags and extra clothing: Staying warm is crucial while you wait for help — especially if you don’t know how long you’ll be waiting.
Bottled water and snack food, such as energy bars, peanut butter and raisins: If it could be hours before you get moving again, you’ll need to stay hydrated and nourished.
A first-aid kit: Keep one in your car no matter what time of year.
A battery-powered radio: So you can get weather updates, information on emergency response efforts, etc. – and conserve your car’s battery.
Emergency flares, reflectors and a battery-powered flashlight: All of these will help you attract attention — and help other vehicles avoid you.
Matches and candles: Even a small heat source can be an effective one.
Your kit doesn’t have to be limited to the list above, of course. Feel free to add items that suit your needs. But most important, keep the kit in your car at all times — and then keep these additional safety tips in mind:
Keep your vehicle well maintained (and gassed up).
Create a trip plan and share it with friends of family.
Stay in your car if you get stuck. Walking to find help is an easy way to get lost and separate from others in your party.
To reduce battery drain, only use your emergency flashers if you hear vehicles approaching. You can keep your dome light on to remain visible.
Remember, even the best drivers can end up in a bad situation when the weather gets bad. It doesn’t take much time or money to prepare an emergency kit — but the potential cost of not having one is enormous.
A safe home, a regular routine, a soft bed – the things that bring you comfort bring your pet comfort, too. It’s so important to give some advance thought to how you’d handle your pet responsibilities during and after a disastrous storm or other event.
Your family emergency plan should include considerations for Fluffy or Fido. Not just so they’re comfortable, but so they’re safe, too.
Here are some emergency planning tips for families with pets:
Prepare Now so You and Your Pet Are Ready Later
Make sure your pet has ID. Always have your home address and/or phone number on a tag attached to your pet’s collar – or printed on the collar itself. You might also consider having a microchip implanted in case those tags fall off.
Keep a current photo of your pet handy. This is important for identification purposes in the event there’s no microchip or tags. If you really want to be prepared, create a “Lost Pet” flyer and keep a few printouts in your emergency kit.
Identify shelters or hotels that accept pets. Keep a list of their phone numbers and addresses, and include your local boarding facility’s number in case you need to drop off your pet. You could also create list of friends or family outside the area who can host you and your pets.
Think security. It’s a good idea to have a secure carrier or harness so pets can’t escape if they panic.
Create a separate pet emergency kit. You should have emergency supplies for you and your family – don’t forget your animal friends! Canned or moist food is best for them, as it can reduce their need for water. Other things to include: blankets, bottled water, pet first-aid supplies, vet records, extra collar and leash, food dishes and other supplies specific to pet type (such as cat litter, etc.).
Consider a buddy system. Talk with friends and neighbors and create a plan where you can help each other care for pets during emergencies. If one of you isn’t home when disaster strikes, the other agrees to see to the animals’ needs for care or evacuation. Be sure to discuss where to meet after an evacuation.
See to Your Pet’s Needs During a Disaster
Don’t leave pets outside or tied up. They may become frightened and escape. And, remaining outside can put them at greater risk of harm.
Separate dogs, cats and other animals. Even if they normally get along, stressful situations can lead to irrational behavior.
Have more unique pets, such as birds? Talk to your veterinarian about their specific needs in emergencies.
Keep a supply of newspapers. If your pets cannot go outside, you’ll need to create space indoors for them to … well, you know. Protect those areas with newspapers, towels or other items.
If at all possible, do not leave your pets behind if you need to evacuate. If you must, however, confine them to a safe area inside your home with access to plenty of food and water. Even leave the toilet seat up in case their other water runs out. And, it’s a good idea to leave an easily seen sign detailing how many pets are in the house, and how you can be reached.
Continue to Be Cautious Once It’s Over
Watch your pets closely. They may still be frightened, even days after a disaster. And, even familiar areas may have changed, so keep them on leash and stay close. Remember, there may be downed power lines or other hazards still present.
Re-evaluate how things went. Could your emergency plan have been better? Are there things you wish you had included in your pet’s disaster kit? Do you need to research more shelters and other facilities that will accept pets? Now’s the time to do it – before the next emergency.
If you’re like most people, you consider your pets part of the family. Including them in your plans, and taking steps before a disaster strikes, will make it easier to keep the whole family together.