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Rising Insurance Costs
Thanks to an unusual convergence of market trends, ushered in by the pandemic and other disruptive events, you may see a bigger change to the cost of your home and auto insurance than usual when it comes time to renew your policies this year.
Insurance rates are based on what an insurer thinks it will cost to make you whole in the event of a loss – whether it’s roof damage during a windstorm or a vehicle totaled during a traffic accident. As you’ve likely noticed, pretty much everything costs more than it did even a few years ago.
What’s driving higher home insurance costs
If you’ve shopped at Home Depot or Lowe’s lately, you’ve certainly seen that the price tags on building materials have risen dramatically. Last year alone, the cost of building materials rose 14.1%, with lumber playing an outsized role in that trend, more than tripling in price since March 2020.
To make matters worse, the home-building industry is facing a shortfall of at least 200,000 skilled laborers, which is driving up construction-related labor costs. Combined with the high cost of construction materials and historically low housing inventory, this has been making home claims much more expensive for insurance companies.
What’s driving higher auto insurance costs
An ongoing shortage of microchips and other critical parts like wiring harnesses, plastics and glass is making it more costly to repair or replace a vehicle after an accident.
Supply chain issues are rapidly depleting inventories of new and used cars. Inventories have reached a critical low-point, falling 87% between 2020 and 2022. As a result, the average price of new cars has risen 14% over the same period, while used car prices have skyrocketed 55%.
At the same time, accidents have become more frequent and severe, increasing the number and cost of auto claims. In the first six months of 2021, nearly 2.5 million people sustained injuries requiring consultation with a medical professional. Accident fatalities in Jan. 2022 were 14% higher than in Jan. 2020.
Focus on value as you explore ways to save
Keep in mind that savings comes in many forms. The value of the coverage you choose today may save you more in the long run than the lowest possible premium. Contact us to review your current coverage. Click here to get an online quote, Compare Quotes | LG Insurance Group (lg-ig.com). We will help you explore opportunities for discounts that could offset higher rates when it comes time to renew your coverage.
After businesses shuttered and U.S. workers were sent home at the height of the pandemic in 2020, a report from Dollar Sprout revealed that more that 27% of those with a side hustle rely on that income to pay their bills. They might be doing anything from tutoring, freelance writing, offering professional consulting services, walking dogs or delivering groceries, to name a few.
The Dollar Sprout report also revealed that:
• Of those with a side hustle, 18% expect to turn it into a full-time source of income.
• Although 23% lost side-hustle income because of COVID-19, 42% remain hopeful about their prospects.
While the pandemic reshaped the workplace, the prevalence of home-based businesses had already given rise to ETSY, the fourth largest U.S. ecommerce site by monthly visits, where people sell everything from crafts and antiques to handmade toys and items for weddings, among other things.
The community of freelancers is increasing steadily. The Freelancers Union, established in 1995, says:
• There were 57 million U.S. freelancers in 2020.
• Americans rack up more than 1 billion freelance hours each week.
• Freelancers contribute more than $1 trillion annually to the U.S. economy.
New models of work create different insurance requirements. As individuals take on side hustles to generate more income or out of a desire to operate their own businesses, they also take on risks. If you have a side hustle, you need to insure yourself accordingly.
Liability insurance tops the list. Your Trusted Choice Independent Insurance Agent® can help you evaluate your side business, assess your existing coverages, and determine if you need a professional or business liability policy in addition to personal insurance. As a highly trained professional, your Trusted Choice agent can advise you of the specific or often overlooked coverages you should consider, and then assemble competitive product choices for you from the insurance marketplace.
Why is this so important? Even the most benign gig could destroy an individual financially in the absence of appropriate insurance coverage. Imagine a child takes a nasty tumble in your home while there for a piano lesson or a client accuses you of plagiarism: You will be liable. Or consider the costs you would be responsible for if the dog you’re walking breaks loose and attacks a pedestrian. The right policy can protect you.
Cyber insurance is also a growing consideration. If you set up an online store to sell crafts or homemade baked goods and a hacker steals your customers’ credit card data, what would be the cost to you? Would you be able to recoup your losses? Cyber insurance can protect you in the event of a breech whether your computer is hacked or your phone containing private information is stolen.
Auto insurance. Some automotive policies are for personal use only. Others may cover a business-related accident, but with limited coverage. If your side hustle involves driving and you get into an accident, do you know whether your insurance will cover you? If not, check with your Trusted Choice agent before an accident occurs.
Even if you are employed as a delivery driver, you need to know whether the company’s insurance covers you and what the limits are for collision, liability and medical. Talk with your independent agent, so you’ll know if you need a commercial policy for adequate protection.
Fire insurance. You probably have a homeowners or renters policy that provides coverage for losses incurred in a fire. But what happens if you operate a home business and spent thousands of dollars on office equipment? Will the insurance extend beyond your personal belongings to cover that equipment? Or, for that matter, will it cover the materials you purchased to make the items that you sell, or the business inventory you store at home?
Find answers before you need to make a claim, and avoid potentially devastating surprises. Your Trusted Choice agent can explain where your personal coverage ends, and where the gaps are in your business coverage.
As your business grows, be sure to inform your Trusted Choice agent so they can work with you to adjust your coverages and ensure the policies keep pace with your needs — especially if you hire workers or engage a contractor. Your agent can advise you about workers’ compensation insurance and employment practices liability insurance. Your agent also can review your contractor’s proof of insurance to determine if it meets your business’s needs.
Think of your Trusted Choice agent as a business partner who has your interests at heart. Your agent will work with you every step of the way as you grow your side hustle and reap the fruits of your efforts. Contact LG Insurance Group today if you have any questions regarding your insurance needs.
It’s national teenager day! Here’s a few teen driver stats, provided by Safeco Insurance, that might surprise you.
Did you know that water damage is the second most frequently filed loss experienced by homeowners and renters each year? (according to the Insurance Information Institute) The infographic below, provided by Safeco, can help you understand the risks, offer prevention tips and share the resources you may need if a water loss occurs.
When deciding which auto liability limits to select on your auto insurance policy, your premium should be secondary. Your primary thought in selecting your liability limits should be protecting your assets and yourself from potential legal liability and avoid exposing yourself to costly lawsuits or judgments. Minimum insurance limits should only be selected if that is truly all you can afford. Once your budget allows, be sure to increase your limits and also consider purchasing an umbrella policy. It is not as expensive as you may think and it could save you during a claim!
Many of us have been victims of identity fraud, or known someone who has. It is a grueling and time consuming process to try to restore your identity and clean up the mess left behind by the criminal(s). Identity Recovery or Identity Fraud Expense Coverage is offered by many homeowner’s insurance companies to guide you through the process and reimburse you for many of the expenses you incur along the way. The infographic below gives additional details regarding Safeco’s optional coverage:
If you are a homeowner and either currently have a home warranty plan or would like to have one if it were less expensive, then you need to read this! More and more insurance companies are offering an optional endorsement that provides much of the same coverage as popular home warranty policies. These plans are often provided to a home buyer by the seller when purchasing an existing home. Some homeowner’s continue to renew these plans while some choose to allow them to expire due to the annual cost. Many insurers now offer this protection at a lower cost, when endorsed onto a homeowner’s insurance policy. The following infographic gives an overview of what is covered by Safeco’s Equipment Breakdown endorsement, including examples of what is and what is not covered.
Contact LG Insurance Group if you would like to learn about this valuable coverage!
Allstate grabbed Georgia headlines last May with less than favorable news that one of their auto insurance programs would be raising premiums by an average of 25%. This is much higher than what we are seeing within our markets, however, we are seeing increases by all carriers this year. The most common or typical increase we are seeing is about 9 to 10%. Given the significant premium changes, we wanted to share what is driving this trend through this infographic. All of these factors may not be in our control, however, a few are such as the ever distracted driver. How many drivers do you see every day talking or texting on their phone? Be sure that you are not one of these drivers and be an example for your family and friends. Whatever small part we can play to mitigate traffic fatalities and losses will help us all.
What can you do today to alleviate an increase you recently experienced? Compare – Compare – Compare! With multiple markets at our disposal, we would love to help you find out just how much you may be able to save. Contact us today!