Friday, January 8, 2010

SC Homeowners Insurance and the Future

The recent financial crisis has not only caused major issues for the real estate industry, but it has also affected the insurance industry, and SC homeowners insurance in ways that you might not realize.

Insurance companies make money in basically two ways: investment income and underwriting income. Investment income is basically making money from investing their profits. Insurance companies invest like the rest of us, in stocks, bonds, mutual funds, etc. How have your investments performed over the last couple of years? So, needless to say, they are not making a lot of money from their investments. Underwriting income or basic profitability is the obvious way we would all think of an insurance company making money. They price risk, charge and collect premiums, take out for expenses and claims, and what is left over is net profit.

I think that in the near future insurance companies will see increased pressure; more so in their property lines such as homeowners, condo, mobile home, and renters insurance. The homeowner line, in general, is not profitable for a lot of companies throughout the industry.

Since the recession began companies have seen the frequency of homeowner claims increase. With the increase in the number of claims and the amount paid out, higher premiums will soon follow. So, here are a few tips to help keep your property insurance as low as possible:
  • Don’t file small claims – A lot of companies offer claim free discounts, so filing a small claim might cost you more in the long run. Usually it takes 3 to 5 years to earn that claim free discount back. 
  • Consider a higher deductible – The higher the deductible, the lower the premium. Having a higher deductible will also help you with the first point. 
  • Insure your home, autos, and other toys such as boats, motorcycles, RVs, and ATVs with one company. Usually if one company insures it all you get various discounts on each policy. Also, remember to look at it as a package. One company may be a little higher on your car but because of the discounts, as a package it is cheaper than having 4 or 5 different companies.
Personally, I think that the more you have insured with one company and the longer you are with that company, the better you are treated. No one wants to lose 4 or 5 policies over bad customer service or a claim being handled poorly. (This point is especially true if you live in a coastal area. Over the years, I have seen small companies selling mainly homeowners insurance come into a coastal area with lower than normal prices only to pull out within a year or two. This leaves the customer scrambling to find coverage) Remember the saying, if it seems too good to be true…

Have an agent, know your agent, and sit down with him or her every year. Things in life change for you and for your insurance company. Make sure you are covered adequately and make sure you are getting all of the discounts that you are entitled to. Companies add new discounts from time to time. Don’t assume you will get them without asking. Insurance is complicated. Don’t wait until claim time to find out if something is covered. Talk to your agent.

Call me for home or car insurance in Myrtle Beach. We'd love to service your insurance needs at Todd Insurance Agency.


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