The Only Constant is Change

When I started  in insurance, as my kids say, in the 1900’s,  The average home was insured for $98,000, the average deductible was $500 and the average cost for coverage was $550 per year.    A roof cost on average $3200, a new home could be bought for an average of $89,000.   We are a long way from those numbers today.  However, the biggest difference is in 1997 Insurance companies in Missouri paid out $269,012,695 in claims  in 2022 the industry, just in Missouri, paid $1,121,497,078 in claims.  Home insurance claims in Missouri have jumped 416%!  Where premiums, deductible and cost are up 300% in 25 years.

In 1997 insurance carriers were making profits of 2-5%, today, only 1 insurance company in Missouri has made a profit and that is Progressive. (We are a platinum Progressive agency )  The rest have lost money, some as much as 20 to 30 cents for every dollar brought in.

The next significant change we are going to witness is a very fast change to “Percentage Deductible”  Instead of having a $1000 or $1500 we will see deductibles of 1% or 2%.   The good news is a 1% deductible for wind and hail will save someone like my parents $200 on their insurance premium. The bad news is knowing what 1% deductible actually is.

When you take a percentage deductible it is 1% or 2% of coverage A, the amount the insurance company thinks it will cost to clean your house up after a loss then build you a new one.  So, if your home is average with coverage of 270,000 a 1% deductible is $2,700 and a 2% deductible is $5,400. 

Let’s assume we have a windstorm…again…. And your roof is politely removed by mother nature.  The average cost of a roof is now about 12,000 so you will be responsible for 2700 at a 1% deductible and the insurance company will pay $9,300.

There is nothing wrong with Percentage deductibles as long as you understand them, and might I suggest we pull a page from Dave Ramsey and prepare for them with an emergency fund.

We predict by the end of 2024 1% wind and hail deductibles will be the standard.

I am going to pivot and end this BLOG with the fastest ways to save money on your insurance:

  • Raise your deductible (I hope you all saw that one coming)
  • Bundle your autos and home together.
  • Attempt to stay with a carrier at least 3 years (carriers are giving deep discounts for loyalty)
  • Do home maintenance as needed, prevention is key.
  • Take care of the small stuff.  A claim paid at $1,000 will cost you more than you will receive.
  • Shop auto rates on cars before you buy a car.  A great deal on a 2018 Hyundai or Kia could double your insurance cost.   Call us before you buy that car.
  • Use Millennium Brokers Group

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Are you ready to save time, aggravation, and money? The team at Millennium Brokers is here and ready to make the process as painless as possible. We look forward to meeting you!

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