Many times when shopping for insurance, the lowest priced policy is often what we gravitate towards choosing. What if we told you that cheaper isn’t always better?
Homeowners Insurance Trends
After the Marshall Fire hit Colorado at the end of 2021, many homeowners in the affected area found out that they were underinsured. This ended up being a massive issue, where people were unable to rebuild because their policy limits did not cover the full price to rebuild their property.
There were two common trends that insurance companies noticed that prevented homeowners from starting the process to rebuild. One reason for this issue was that homeowners did not let their insurance companies know whenever they made additions to their home. Things like adding a swimming pool, additional square footage to your property, or even opening a new mortgage. These things all need to be reported to your insurance company to ensure that your policy limits match the value of your property.
Another trend that insurance companies noticed was that many homes only had the standard limits required by the state. This is where “cheaper isn’t always better” comes into play. Although the homeowners still had insurance, the policy limits were so low that the insurance companies legally could not provide the total cost to rebuild.
Auto Insurance Trends
Being underinsured does not stop with your homeowners policy. In fact, some of the underinsured or uninsured auto statistics may be quite shocking!
On the auto side of insurance, as of 2021, 16.3% of drivers in Colorado were uninsured, making uninsured motorist coverage something to strongly consider. This number has since then grown, making this coverage more appealing to vehicle owners. With more people moving to Colorado, adding this coverage can be extremely beneficial in case you are ever in a “worst case scenario”.
All states throughout the US have different laws regarding uninsured motorist coverage. A handful of states require by law that your auto insurance policy includes uninsured motorist coverage. Additionally, in some states, you can be fined for driving uninsured.
Another common rule for some states in the US is the “No pay, no play” rule. For these states, if you are uninsured, the state will limit the compensation one would receive from an accident. If you are not driving with insurance, the states do not feel that the uninsured driver deserves the compensation that an insured driver would receive.
Keep in mind that these statistics are only for uninsured drivers - not underinsured drivers.
Similar to homeowners insurance, another issue is that many vehicles only have the minimum requirement for the state's insurance limits. When first purchasing your auto insurance policy, the state-required limits may seem like all you need. Unfortunately, there are many circumstances where the limit will not cover the entire total of an accident - especially if you are at fault.
There are some instances when the standard policy limits may be enough for you. If you are not driving often, and/or only driving a short distance, the lowest limits may be applicable to you. It is important to note that even though your accident exposure may be less than someone driving more frequently, there is still a chance that you can be involved in an accident that exceeds your policy limits.
At the end of the day, when it comes to your insurance, we always recommend that it is better to have too much protection than not enough protection. It can be unfortunate that we never know when an accident or event will occur that requires us to use our insurance, but that is why you can never be too safe!
Commercial Business Insurance Trends
Similar to homeowners and auto insurance policies, businesses struggle with being underinsured as well. Along with this, insurance professionals are noticing another trend with businesses and insurance. When filing claims, many businesses are learning that certain policies that they thought would be beneficial to them do not provide enough coverage as needed.
When speaking with an agent about what coverage you should have, it is very important to list what aspects of your business are most important, or your business can not function without. Recently, we had a gentleman in the Oil & Gas industry reach out to Alliance Insurance regarding a very similar issue.
The gentleman had an insurance policy in place, but when a piece of machinery was damaged, due to the nature of his insurance policy, he was unable to get paid out the full amount, costing him $400,000 in permanent loss.
Staff at Alliance was able to provide him with a policy to help him come back from the major loss. He is still unable to operate at full capacity, but with this new policy in place, he is hoping to be back to normal very soon. You can read about how we were able to help him in detail here.
Insurance is a very important aspect for so many parts of life. If you would like to go over what insurance options may suit your needs best, please give us a call at (303) 279-9700, or fill out the form below and one of our agents will reach out to you.