Rising Insurance Deductibles & Premiums = Reduction in Coverage?

By September 13, 2017Uncategorized

Photo by Braden Collum

Historically, we have received the majority of our contact from new clients for three reasons: increases in their premiums (price), mishandled claims (coverage), and dissatisfaction with their agents (service). Recently we have received scores of incoming calls and emails as a result of a new trend which consists of a combination of mandated policy changes and increased premiums. The most common is rising insurance deductibles on homes and commercial buildings. Some carriers have implemented ½%, 1%, and even 2% minimum insurance deductibles.

What Rising Insurance Deductibles Means For You–

How does this affect you? Let’s say your home or business is insured for a $250,000 replacement cost. The majority of our clients would carry a $1,000 deductible in this case. If your carrier implemented a percentage deductible increase, you would be facing a $1,250, $2,500, or $5,000 deductible. Obviously, this is a reduction in coverage, but not the end of the world. Most folks, although not happy about it, could manage this in the time of a loss. The double whammy comes when the carrier also raises your premium. Suddenly you are paying more for less coverage.

Unfortunately, many consumers rarely review their homeowner’s or commercial building insurance renewals. Often, they are not aware of any change in premium until their payment increases and even then may just assume their property taxes increased.

Recently my homeowner’s insurance premium increased 27%. I made no claims or changes to my policy. Additionally, my deductible was raised from $1,000 to $1,500. I have been insured with this carrier for 5 years. My response was to immediately explore my options. In full disclosure, I have not changed carriers to date. Instead, I was able to make up some of the increase by reducing my auto premium by approximately $600. (I did so by rewriting it with the same carrier, a whole different topic to be discussed in a later post.)

How Can You Protect Your Business & Your Family

Your call to action: Review your most recent and the prior year’s insurance declaration pages and policies. Compare your deductible(s), coverage features, and premium. If you have not discussed your coverage and current lifestyle needs with your insurance advisor in the last 3 years, it is time to have that discussion and a formal review.