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The Inflation Effect: Protecting Yourself from Rising Rates

Inflation is an economic phenomenon that affects various sectors, including the insurance industry. Home insurance rates, in particular, have seen a noticeable rise in recent years, primarily driven by inflationary pressures. In this article, we will explore how inflation has impacted home insurance rates from the perspectives of both insurance carriers and consumers. Additionally, we will provide valuable tips on how consumers can protect themselves amidst this market turmoil.

The Insurance Carrier’s Perspective on Inflation

Insurance carriers play a vital role in assessing risks and setting premiums for homeowners. From their perspective, inflation affects multiple aspects of the insurance industry, contributing to the rise in home insurance rates:

a) Increased Cost of Rebuilding: Inflation drives up the cost of building materials, labor, and construction expenses. When catastrophic events occur, such as hurricanes or wildfires, the cost of rebuilding and repairing damaged homes escalates significantly. Insurance carriers need to account for these higher costs, leading to an increase in insurance premiums.

b) Higher Claims Costs: Inflation not only affects rebuilding costs but also impacts the price of everyday items. As a result, claims costs for stolen or damaged possessions rise, influencing the overall risk exposure for insurers. To compensate for this increased risk, carriers adjust their premiums accordingly.

The Consumer’s Perspective on Inflation

For consumers, rising home insurance rates can put a strain on their budget. Here are a few ways inflation affects homeowners:

a) Increased Policy Costs: When insurance carriers raise their premiums, homeowners may find themselves paying more for the same coverage. This can create financial stress and force consumers to reevaluate their insurance needs.

b) Impact on Homeownership: Inflation can also affect home values, which subsequently impacts insurance rates. As property values increase, so does the replacement cost of a home, leading to higher premiums for homeowners. This can make homeownership more expensive and potentially affect affordability.

Tips for Consumers to Protect Themselves from Inflation

Despite the challenges posed by inflation, there are strategies consumers can employ to safeguard themselves against rising home insurance rates:

a) Shop Around and Compare: By having an Independent Insurance Agent such as Good Apple Insurance with access to multiple carriers can help save you money. They shop around and obtain multiple quotes to find the best coverage at the most competitive price. Consider factors like coverage limits, deductibles, and customer reviews to make an informed decision.

b) Review Coverage Regularly: As property values and inflation fluctuate, it’s essential to review your coverage periodically. Ensure that your policy adequately reflects the replacement cost of your home and possessions. Over time, consider adjustments to keep pace with inflationary pressures.

c) Bundle Policies: Many insurance carriers offer discounts when homeowners bundle their policies, such as combining home and auto insurance. Consolidating your coverage with one insurer can lead to cost savings and potentially mitigate the impact of rising home insurance rates.

d) Increase Deductibles: Adjusting your deductible—a portion of a claim you agree to pay out of pocket—can help lower your premium. However, it’s important to ensure you can comfortably afford the deductible amount in case of an unfortunate event.

e) Enhance Home Security: Taking steps to improve your home’s security can reduce the risk of theft or damage, potentially lowering your insurance premiums. Installing security systems, smoke detectors, and deadbolt locks are some measures that insurance carriers may reward with discounts.

In Conclusion

Inflation has undoubtedly influenced the rise in home insurance rates, affecting both insurance carriers and consumers. While carriers must adjust premiums to account for increased costs and risks, consumers can protect themselves by being proactive. By shopping around, reviewing coverage regularly, bundling policies, considering deductible adjustments, and enhancing home security, homeowners can navigate the market turmoil and secure affordable and comprehensive coverage. Remember, staying informed and making informed decisions is key to weathering the storm of rising home insurance rates.

Is Water Back Up Coverage For My Home Necessary?

Water back up loss happens when water or water-borne materials back up into your home. This comes in through sewers, drains, a sump pump, or related equipment and can cause serious damage. It can also be caused by sump pump mechanical failure, aging pipe lines, tree roots damaging the water lines, or electrical outage where the pump cannot run. Water backup is a common type of loss that occurs in many homes but many insurance companies don’t cover this on a standard homeowners or renters insurance policy.

There are a lot of misconceptions about who is more likely to experience this type of loss.  Truthfully, it doesn’t matter if you rent or own your home,  live on a hill or don’t even have a basement in your home. Water backups can happen to literally anyone! It is actually one of the more common type of claims that homeowners experience and one of the messiest ones to have to deal with on your own. Without this endorsement you could be stuck paying the price for the cleanup and damages out of your own pocket and it can be costly.

Water damage is something you do not want to handle cleaning up yourself. Water gets into every crevice, nook and cranny of your home. It can get into areas that you cannot see and cause mold and mold spores to grow. Mold exposure can cause severe illness or even death especially if you have respiratory or allergy issues. It is best to hire a professional to take care of this as they have the necessary tools, products and equipment specifically for water and mold damage.

Water backup is an optional coverage that you can add to your policy. Well, how much does it cost? Its more affordable that you might think! You’ll typically pay anywhere from $30 to $250 a year. Considering the average claim is around $5000 it may well be worth your while to have this coverage on your policy. Talk your agent today to get a home insurance quote that includes water backup coverage. They are an excellent resource to help you learn and understand how this often overlooked coverage can benefit you and your home. Your home is one of your greatest assets. You want to make sure you have the best home insurance protection in place in case of a disaster.

You may also want to consult with an expert such as a plumber or a home waterproofing company. They can inspect and determine how best to avoid a loss from occurring by placing backup prevention valves or installing the proper drainage systems in and around your home.


Things you can do to prevent a backup are:

*Avoid pouring grease and fat down the drain.

*Do not flush items like paper towels, feminine hygiene products or diapers down the toilet.

*Install a battery back up for your sump pump (in case of power outage).

*Have your sump pump checked and cleaned annually. Run it every season to make sure it is still operational.

*Inspect your yard and surrounding area of your home to make sure the landscaping and irrigation systems are helping water flow away from your foundation.

*Have the tree roots trimmed and kept away from your underground sewer pipes.

*Replace old metal or terra cotta pipes with plastic or PVC pipes to prevent tree roots from causing them damage.

*Check your gutters and downspouts are allowing the water to flow properly and away from your home.

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Why auto insurance agents are still needed in the digital age

The following is an opinion article written by Seth Birnbaum, CEO of EverQuote.

In today’s digital age, the processes of many industries are moving to a predominantly online space. With multiple devices that access the internet at any time or place, customers now expect the information they’re looking for to be available at their fingertips. This is especially true in the auto insurance industry, with insurance companies developing mobile apps that make it easier for customers to submit claims and view policy information from their phones or computers. And when you consider consumer buying habits, the trend is clear: 71% of auto insurance shoppers started online last year.

Because of such increased digitization, some may wonder why auto insurance agents are important. If consumers are shopping online, what is the point of having an in-person intermediary? Are they needed in a world that is so integrated with the internet?

The answer is yes. Auto insurance agents are still needed in the modern world and in fact, they are as important today as ever before.

Agents are still the most common purchase method of auto insurance

A 2016 J.D. Power study found that while 74% of consumers do use insurer or marketplace websites to obtain quotes, only 25% actually buy their insurance policy online. In-person and over-the-phone contact is integral to a sale. Despite all of our high-tech gadgets and devices, consumers still value human contact over all else. A website, virtual agent, or mobile app is not always a good enough replacement to handle a more complex product like auto insurance.
Consider the following statistics:

  • While shopping starts online, 50% of auto insurance shoppers close a purchase through direct contact with an agent, and 22% do so by phoning a call center.
  • 74% of consumers who have never purchased an auto insurance policy online cite the desire to meet or speak with an agent as the top barrier to future online policy purchase.
  • Only 10% of agency writers’ new business is closed on their website. Consumers still want to talk to a person to have their questions answered.


What Can’t Be Replaced with Digitization


While insurance may often be perceived as a commodity, it is still a complex and difficult product to configure. There are several types of coverage, deductibles and options available as well as different levels of mandated coverage from state-to-state in the US. With bundling options, laws and discounts—it can be difficult to create an online experience that gracefully handles such complexity.

That’s why insurance agents are so important. While consumers may start their search online, they don’t end there. Agents provide consumers with more than a policy sale, and no online bot can replace that level of expertise. Agents are knowledgeable, offer advice and help auto insurance shoppers make informed decisions. Consumers can make sure that they are getting the right coverage and ask any questions they have about their policy. Additionally, agents are often more aware of available products than consumers are and can assess consumer risk management or help determine the level of coverage that is needed for unique situations. They may also know about discounts and current trends that consumers do not know of and that a website or app will be challenged to present clearly.

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Furthermore, 88% of insurance consumers are looking for more personalization in insurance. Agents can help satisfy that demand with over-the-phone or in-person contact. While websites can personalize messages and sales, agents can often do more. Good agents know their customers, and that offers a unique value proposition to consumers, as all of their questions can be answered in one place and their agents are aware of their needs.

That said, insurance shopping is a multi-channel experience. Agents and insurers need to create a seamless online to offline transition to avoid the risk of losing potential customers. If customers start their search online, they need a way to get in touch with an agent quickly. While insurance carriers spend billions of dollars on marketing each year, they often struggle to acquire desirable customers for their underwriting preferences. On the other hand, agents often lack the scale and technology to compete online. Services and software from online marketplaces are available to help agents cross over the barrier from digital to phone and in-person contact.

Today’s technology does not impede the value of insurance agents – in fact, it proves their worth. Agents only need to understand how insurance consumers are shopping and use that to their advantage. Considering that price is the main factor involved in a consumer’s decision to purchase insurance, it’s critical that agents leverage the tools necessary to make themselves readily available online so consumers have the best opportunity to find the right coverage at the right price. Agents are knowledgeable about what their consumers need and how to find it. This distinct advantage, coupled with a strong online presence, will help them succeed in the modern digital world.

The preceding opinion article was written by Seth Birnbaum, CEO of EverQuote. The views expressed within the article are not necessarily those of Insurance Business.