If your insurance premiums are skyrocketing, you are not the only one. As a result, insurance litigation is increasing. So as a consumer, it is vital that you learn how you can protect yourself.
But first, let us take a look at various reasons why your insurance rates are higher.
Whether you admit or deny climate change, the facts are simple: There have been more billion-dollar, single-event disasters in the United States than ever before. And it’s not just the coasts that are affected. These disasters include coastal hurricanes, Midwestern tornadoes, floods, fires, and more.
Insurance companies themselves have insurance, called re-insurance. Since there are more claims due to more severe and more frequent natural disasters, and because insurance companies are paying out more due to these claims, re-insurance costs also have increased.
The only way insurance companies can make up for these payouts is to increase costs to their clients.
Inflation is also causing more claims to be made. Small auto accidents not involving other people or incidental damage to roofs and homes are leading to insurance claims; because costs of living and inflation are high, people can no longer afford to pay for certain expenses out of pocket.
Enter insurance litigation. Litigation is on the rise in this area because 1) a client thought they were covered under their policy, but they weren’t; 2) more claims are being disputed due to economic pressures; 3) insurance agencies are more apt to deny or challenge claims, so as to attempt to mitigate costs; and 4) terms of insurance are changing, leading to more disputes over terms and exclusions.
Fortunately, there are ways to try to curb some of the litigation, and some of the costs.
First, whenever entering into an insurance policy or renewing your old one, check the fine print. Look for changes in terms, inclusions, and exclusions. If you live in an area susceptible to flooding, you are going to want to make sure your home insurance covers that. Does your auto insurance cover injury to pedestrians and other drivers, or merely the cost of repairing your vehicle?
Second, try to minimize your small claims/claims not involving other people. As hard as these economic times are, if you are able to pay out of pocket for a claim, it will be better for your insurance premiums. This way, you can avoid litigation if your insurance carrier disputes the claim. In addition, insurance companies keep track of the number of claims that you make. The more claims you make, the higher your premiums can be. And, in fact, some insurance companies can deny you coverage entirely, if they believe you make too many claims! This all leads to more – you guessed it – litigation. (Pro tip – even calling your car insurance company for a tow is considered a “claim” that could count against you. Insurance companies can “look-back” five years to review claims you have made with various carriers.)
Other ways to save money include:
- Bundling your home and auto insurance
- Taking on a higher deductible
- Researching credits that your insurance company gives. Some companies decrease premiums if you have a home alarm system, for instance.
When in doubt, speak to a licensed insurance broker. Often, if you call an insurance company with an online presence, you are speaking with a company representative reading from a script, not with a licensed individual. An insurance broker can look at all of your insurance needs and suggest the most reasonable and protective route to take; they serve as your advocate.
The more you know about your policy and your insurance company’s terms and conditions, the more you can protect yourself against claims, save money, and avoid costly litigation down the road.
This article originally appeared as a column for the Cleveland Jewish News.