Risk & Business Magazine Moody Insurance Spring 2017 | Page 27

HOME & AUTO INSURANCE
Home And Auto Insurance
BY: MARTHA RICCI
MOODY INSURANCE
Rate Challenges
A
s home and auto owners
witness their insurance rates
creep up year after year, there
are preventative measures
policyholders can take to
minimize or even reduce their insurance
costs. Given that most policy rates are
affected by claim activity, it makes financial
sense to take preventative measures to
reduce claim activity.
PREVENTATIVE MEASURES FOR
HOMEOWNERS
Although there is little that can be done to
prevent damage to your home from natural
disasters such as hurricanes, tornadoes, or
floods, homeowners can take action to
prevent water damage, which is a common
cause of insurance claims. Because when you
have insurance claims, you can be certain
your insurer will respond with a rate increase
at renewal time.
Many of the national home insurers have
begun to offer discounts to homeowners
who install automatic detection devices that
can help reduce insurance claims:
• Water Shutoff Valve – Installing a
water monitoring and shutoff system
can safeguard your home from water
damage that results from plumbing
issues such as leaking supply lines and
plumbing failures.
• Humidity Sensors – The environmental
conditions in your home can have a
major impact on your home. Installing a
humidity sensor can help homeowners
detect increased humidity levels which
possibly signal a water leak.
• Temperature Monitoring – Installing
a digital temperature monitor
in your home can act as an early
warning system that detects spikes in
temperature, that could result in a fire,
or drops in temperature, that could
result in freezing pipes.
CHALLENGES FOR HOME INSURERS
It’s important to note that your homeowner’s
insurance policy is not a roof maintenance
policy or warranty. Your insurer will be
unwilling to repair or replace your roof if it
has been poorly maintained or has worn out
its usefulness.
Unfortunately, Colorado’s Front Range
Urban Corridor, which happens to be
located in the heart of “Hail Alley,” receives
the highest frequency of unusually large
hail in North America. Homeowners can
easily count on experiencing catastrophic
hailstorms each year as a result.
Policyholders in this region should be
prepared for possibly higher deductibles for
wind- and hail-related claims in the future.
These deductibles can be either a flat dollar
deductible or based on a percentage of the
home value. Most direct writers or captives
are already mandating these deductibles.
CHALLENGES FOR AUTO INSURERS
National auto insurers are regularly filing
for rate increases because of significant
increases in losses paid. There are several
factors that are contributing to this increase
in claim payments:
•
New Car Purchases – According to
the Associated Press, new-car sales
skyrocketed in 2016 in the United States
with more than 17.5 million vehicles sold.
Dealerships attributed the increased car
volume to low interest rates and rising
employment but also recognized the
allure of new technology that appears to
be exciting drivers across America.
• Number of Miles Driven – Lower gas
prices typically leads to more driving
which leads to more accidents on the
nation’s highways. Of course, increases
in accident claims motivate insurers
to file for rate hikes to protect their
bottom line.
• Distracted Driving – It’s no secret that
drivers have become more distracted
because of cell phone use and texting
while driving. According to the Centers
for Disease Control and Prevention
(CDC), each day eight or more people
are killed and 1,161 are injured in car
accidents that involve distracted drivers.
•
Rising Medical Costs – Auto insurers
across the country are witnessing
substantial increases in medical costs
from policyholders and claimants. The
average liability claim per accident has
risen from $12,900 in 2006 to $17,024
in 2015 while claim frequency has
actually dropped during that time.
Moody Insurance Agency is an experienced
broker who represents multiple highly
rated insurance carriers. We encourage our
customers and prospective customers to call
with any questions and to discuss possible
options. We are always here to help. +
Martha brings more than 25 years of
experience specializing in consultation,
analysis, and coverage placement for
High Net Worth individuals, families, and
family offices. While her clients include
individuals whose businesses are in the top
of the Fortune 500, Martha is also highly
knowledgeable in all areas of Property/
Casualty in the Personal Insurance market.
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