Let’s take a look at two of the most common policy types that affect many Californians and why their prices have risen:
Car insurance premiums have been on a steady rise.
There are more than a few reasons for that, but here are several of the biggies. Distraction has always been an issue for drivers.
Whether it is fiddling with the radio to find a favorite station, dealing with sibling rivalry that’s threatening to turn your backseat into World War III, or trying to eat a juicy burger from the drive-through without dripping any sauce and toppings into your lap, distractions are a constant for drivers.
With the introduction of cellphones to the plethora of pre-existing distractions, collisions have become such a huge issue that insurers have no choice but to increase rates. Also, thanks to many improvements to modern vehicles such as rear cameras, Bluetooth, and all of the other safety features that are becoming mandatory, the price of repairs has gone way up.
In order to make sure your policy covers the cost of those repairs, your insurance rates reflect that, too.
With well over 26 million drivers, California has a larger number of licensed drivers than any other state. More vehicles on the road equals more potential accidents.
Homeowners insurance is a whole different story.
Wildfires have wreaked havoc across vast areas of California in recent years.
Because of this, many insurers won’t even offer insurance to homeowners in rural areas that are at high risk for wildfires.
Prices reflect how far you are located from the nearest fire station, and how much of a risk wildfire is in your vicinity.
Some insurance companies have been forced to file for bankruptcy after the majority of their customers filed claims following losses to wildfire.
Some premiums have risen through the roof, and much real estate is going unsold after potential buyers find out there are no insurers willing to sell them homeowners insurance.
Insurance companies can’t just decide to raise their rates with no limits.
The California Department of Insurance (DOI) is there for the consumers, making the final decision when it comes to price hikes.
In normal conditions, there is a limit to the percentage of increase that is allowed.
In situations like the wildfires, it only makes sense to increase rates rapidly to ensure that the customers will not be disappointed due to the sudden failure of their insurance company.
After all, you are only covered for as long as your insurance company is in good financial standing.
Thankfully you have the DOI in your corner, making sure your insurance agent/broker is licensed, your policies aren’t too high, and you are served fairly by your insurer.
As always, if you have any questions, I am glad to discuss the topic of insurance with you, and welcome your phone calls.