Mike Spiering holds Francesca Spiering as she stands amid floodwaters surrounding her home in Hollywood, Florida, on April 13, 2023, as the area was hit by record rainfall. .
Joe Reddell | Getty Images
The cost of insuring your most expensive assets has soared. While overall inflation has slowed, insurance costs are taking up a larger share of many household budgets.
The average annual growth rate is Home insurance That number grew by nearly 20% between 2021 and 2023, and homeowners expect another 6% growth in 2024, according to virtual insurance agency Insurify. This will bring the average policy cost to $2,522 by the end of the year.
Car insurance premiums have also increased significantly.
Average cost of motor vehicle insurance up 16.5% According to “August 2023 to August 2024” Bureau of Labor Statistics. Bankrate estimates the average cost of full-risk auto insurance in September was $2,348 per year.
Shannon Martin, a licensed insurance agent and contributor to Bankrate, said there are many factors causing home insurance rates to climb, including increased costs for home construction supplies and repairs, a significant increase in claims litigation and weather-related The frequency of incidents increases.
Experts say extreme weather events, higher replacement and repair costs and increased medical bills after accidents are driving up auto insurance rates.
Still, there are ways to mitigate the impact of rising premiums. Here are six strategies to consider:
1. Shop around to find a new insurance company
Consider switching to another insurance company. While most people choose their auto or home insurance company year after year, it’s smart to shop around, experts say.
About 37% of drivers said they will or have received quotes from new insurance companies to cope with rising insurance rates, and 27% have already or plan to switch insurance companies. new survey Provided by Autoinsurance.com.
Buy car and home insurance once a year to make sure the rates you pay now remain competitive, experts say. You may also want to compare rates if there are changes in your life that may affect your rates.
“If you’re moving, getting married, or buying a new car, this is also a good time to shop around,” said Maya Afilalo, insurance analyst at Autoinsurance.com.
Although extreme weather events have adversely affecting many insurance companiesenterprises are at different stages, and their adjustment methods are also different.
“So the company you’re with now may have higher rates than a company that’s already in the recovery phase,” said insurance broker Mike Barrett, owner of Barrett Insurance Company in St. Johnsbury, Vermont. Much more. “Shopping can really help you save some money. ”
On June 20, 2024, the South Fork Fire continued in Ruidoso, New Mexico, USA, with scenes of burned cars and buildings.
Typhon Koskun | Anatolia | Getty Images
Before renewing your policy, compare costs by getting quotes from several insurance companies. You can go online or use an insurance marketplace app to get quotes from multiple companies at once. Or you might want to talk to an independent insurance agent – there’s usually no charge to do so, as they usually get a commission from the insurance company when they sell you the policy. You can find agents in your area through the following methods American independent insurance agents and brokers.
Lower premiums aren’t the only factor to consider. See AM Best and Demotech, which rate insurance companies on their financial strength and reliability.
“What you’re looking for is the financial strength of the carrier, which shows their ability to pay future claims and looking at their history of paying claims in the past,” said Florida insurance agent David Carothers. Venture Partners in Valrico, FL.
2. Increase your deductible
Your deductible is the amount you have to pay Pay out of pocket Before the insurance company gets involved.
Take auto insurance, for example. “Increasing the deductible from $500 to $1,000 can reduce optional collision and coverage premium costs by 15 to 20 percent,” said Loretta Waters, vice president of the Insurance Information Institute. Worters said.
But if you raise your deductible, you need Adequate emergency fund Cover it.
3. Adjust your coverage
If you’ve been with the same insurance company for a few years, you may have made some changes since purchasing your policy to better protect your home from hazards, such as a new roof, hurricane-affected windows, or a security system . Experts say updating your coverage to reflect these changes can save you money.
Reducing coverage for certain items, such as jewelry or art, may also lower homeowners premiums.
Dropping collision and/or comprehensive coverage on older cars can also reduce costs. According to the Insurance Information Institute, if your car is worth less than 10 times your premium, you may want to consider dropping coverage. But this means that if you are in an accident or your car is damaged by weather, theft, or other non-collision events, you will have to pay for any damages out of pocket.
“You may be responsible for paying for other property damage that’s not covered by the insurance company,” said Rod Griffin, senior director at Experian. “So you know, there’s a certain amount of risk and reward involved.”
Simple Images | Moments | Getty Images
Still, experts say having enough insurance and the right coverage may save you more money in the long run. If you don’t have the type of coverage you need (such as flood insurance), saving on premiums can end up being costly.
According to the Federal Emergency Management Agency, just one inch of water can cause approximately $25,000 in damage to property. However, most home insurance Explicit exclusion of flood damagefew pursue this kind of coverage. On average, about 30% of U.S. homes in areas with the highest flood risk have flood insurance, according to Center for Risk at the Wharton School of the University of Pennsylvania.
Experts say you may need flood insurance even if you’re not in a high-risk area.
“A lot of people don’t buy because their bank doesn’t require them to, and then all of a sudden, the hurricane comes. According to the map, they’re not in a flood zone, and we have storm surge and all kinds of claims that are not covered,” Florida said Venture Partners’ Carothers.
4. Look for potential discounts
One of the most popular discounts is bundled insurance. You’ve probably seen a lot of ads about saving money by buying home and car insurance from the same insurance company, but experts say that’s not always the case. You may find better prices through different companies.
“It’s really good to investigate from both angles — bundling, not bundling — and always talk to your agent before making major changes to the home or expensive changes you think will save you money,” says Bankrate’s Martin. chat.
Homeowners may receive discounts for being claim-free for a period of time or for installing the following features Better protect your home Stay away from danger.
Car insurance discounts range from safe driver and good student discounts to taking defensive driving courses. There are also discounts for older drivers, as well as low-mileage discounts for drivers who drive less than average miles.
5. Maintain your credit score
Your credit history is okay Affects auto and home insurance rates. In states where credit is a factor in rating insurance companies, the higher your credit rating, the less you’ll pay for insurance, experts say.
Bad credit can significantly increase your insurance costs. For example, a driver with poor credit would pay $4,349 a year for full coverage coverage, while a driver with good credit would pay $2,033 a year, according to the data. one bank interest rate Report.
6. Price insurance premiums in advance
Work the cost of insurance into your home or car budget from the beginning. Establishing a pricing policy early on can help you avoid price shocks when it becomes difficult to exit a purchase.
Additionally, when you purchase a home, consider the possibility of extreme weather on your property in the future, which could mean you have Insurer options are more limited and face higher insurance prices. Some websites, e.g. first street and climate check, Can predict the impact of extreme weather events on your home in 2050.
“You always put yourself in a better position to price your insurance before you invest emotionally and financially,” Martin said.
—CNBC producer Stephanie Dhue contributed to this story.
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