​Let’s take a minute to talk about insurance rates. Watching the sun come up over Table Rock Lake this morning (Saturday 6/25), sitting in the stillness of the early [very early] morning hours I’ve had some time to reflect on life and business. I am truly blessed with a healthy, happy family. Our son is now 3 and boy are our days filled with all sorts of craziness! I think about all the things we have done in his life so far and I also think about all the things I can’t wait to do with him. As I think about the future, I find it hard to look much outside of the present day and time. I know the extreme prices of life’s essential items are taking a toll on all of us today. It seems like every time we make a trip to the grocery store or fuel pump the prices keep getting higher. That fact also rings true across every good and service in today’s market. Insurance is no exception. Full disclosure, I am in no way advocating that consumers should make their insurance decisions solely based on price. That is another blog for another day!

Before we talk about rates, it’s important to understand some of the basic principles to how your individual rates are determined. While it is true that the type of vehicle and level of coverage you pick play a part in the pricing… it’s becoming less prominent in that decision. There are literally dozens of bits and pieces of information that insurance companies use to assess your individual risk. Things like credit, length of time with your current carrier, number of accidents, number of claims in general, number of infractions on your driver’s license, the current liability limits you carry, the number of drivers in your household, the age of each driver, if you have had any recent lapse in coverage, your bill payment consistency, etc., etc., etc. The list goes on! For making this easier to talk about, I refer to all these combined risk factors as your “insurance score”. Much like your credit score, this number is different for EVERYONE. That is why talking to a neighbor or friend and comparing rates on similar houses and vehicles doesn’t work any longer. It’s just like credit. You and I won’t get the same exact loan offerings or credit limits offered either. Everyone presents their own unique risk.

Although we are all familiar with changing insurance prices in the last few years. The ups and downs of that cost becomes a bit overwhelming at times. I find myself asking, why? Let’s face it, if I am asking that as the insurance agent, I know that everyone outside the insurance industry must be asking the same thing! In my quest to answer this question I do find some obvious arguments, and some that are a little less public knowledge. So, without further a due, let’s dive in.

First, lets start with the simple reasons. Think back to 2018/2019. Life was good it seemed. Cost of fuel was down, groceries were plentiful and priced fairly, and in general family activities didn’t require a second mortgage. Insurance rates were also seeing the benefit of these good times. After a rough stretch in 2017, premiums were finally leveling out and for the most part becoming stable. Now think back to 2020/2021. Covid hits. The country is shut down and most of the nation is sent into a “work from home status”. Traffic levels fall drastically, and the number of accidents decrease with the lack of traffic on roadways. Many of the insurance companies during this time lowered rates on top of giving back some refunds to customers. Time goes on and the effects of shutdowns, staff reductions, and a lack of efficiencies in the new “work from home” culture (among many other political factors we won’t discuss) start to show their bad side effects. Goods become hard to get. There are shortages of all sorts of products. Supply and demand kicks in and prices begin to rise. Moving into late 2021/2022 inflation hits an all time high. It now costs double or more to do the same work or purchase the same goods we were buying just a short time ago in 2019-2020. It now cost 40-60% more to repair or replace vehicles. So, to answer the biggest part of the question, why are insurance rates rising? It’s rather simple business. The cost of the services we (insurance companies) must pay for during claims has increased dramatically, therefore our prices must increase to remain in business. This principle applies to ALL types of business. After all, there isn’t much these days that either hasn’t changed price or has gone down in price.

Second, let’s dive a little deeper into the business aspect of it. Again, our cost of business has increased rapidly so we must adjust accordingly. This is also exaggerated by what I mentioned earlier, that is, the price reductions and kick-back customers received during the early part of Covid. When comparing rates prior to Covid, the increases we are seeing now are not as dramatic. But let’s get back to my second part. This has to do with business operation in general. The basic formula to business survivorship is:
           my materials and incoming cost [X]      PLUS    my mark-up/labor rates [Y]     EQUALS                                                                    market price of my good/service [Z].      X + Y = Z.
What is changing now in the market is the X factor. What it cost businesses to either produce their service or product has severely increased. Most businesses today have not increased their Y factor at all. The insurance industry in general has taken a big loss in the last 2 quarters simply due to the rapid inflation with little to no warning. Just as any other business, we have 2 choices. A) go out of business or B) raise rates to account for the inflation. There is a lot more detail to what is used for rate determination of course, but for now we will keep it to the basic.

Last, and often a cost factor that is overlooked when it comes to insurance, are medical expenses. We mostly think of vehicle cost and repairs when we consider our insurance policies. Truth is, that’s only a small portion of what insurance companies pay out during claims. Legal fees and medical bills play a very large role in how rates are determined. And, you guessed it, those cost have also risen dramatically.

These are just a couple of the contributing factors when it comes to your insurance premiums. There are many other smaller, more intricate details that must be accounted for like rising lawsuits accompanying auto accidents with injuries, increased accident volume, etc. Talking to your agent can help you get a bead on reasoning for your specific company’s increase(s).
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One final thought I’d like to add to the mix. Consider a local agent if you find yourself shopping. We all know there are plenty of online offerings for insurance, but where does your money go when you pay them? Shopping local gives you and in-person and available agent for starters, but it also helps to keep a local small business alive. Plus, most local agents will be spending their money with other local businesses and supporting your local schools/charities/etc. I hope if you’ve made it this far in the article you now have a better grasp on some of the reasoning behind rising insurance rates. But if not, please reach out to your agent or me…. I’m happy to give you my 2 cents on the matter and even review your current policies if needed!     – Cody

This blog has a chart! Yep, this time we have pictures to look at too! Click the PDF link below to get the article.... Enjoy! 

As winter is approaching it’s a great time to evaluate your home insurance. I have a few questions for you.

1. Do you have coverage for busted water lines?
2. Do you have coverage for water damage due to ice dams?
3. How will your policy pay out for damage due to the harsh winter weather? Full Replacement Cost, Repair Cost, Actual Cash Value?

Let’s address these questions individually. As they were presented if you answered something like yes, I’m’ not sure, and “scratches head” Full Replacement, maybe? We need to chat. These questions are all important in our neck of the woods. But they only hit the first level of the best way to analyze the answers. Don’t worry! This is why I’m your agent…. Or need to be your agent. I know what you really need to know about this, and I’m happy to share with anyone willing to read.

Question 1:

I’ll be honest, this is pretty basic coverage for most home insurance policies. You have a water line suddenly bust and flood your kitchen, a typical homeowners policy will pay for the water damage. But, let’s dissect the actual question and a few key words I just used.
What does your policy pay towards having a plumber come out and repair the damaged line(s)? You might answer that as it’s part of the cost. BUTTTTTT, it might shock you to know that a big portion of “good” policies don’t pay for the plumbing repair in this situation. Some carriers offer extra coverage to add onto your policy, and others simply don’t. How would you like to have to pay a plumber out of pocket $800 to make a quick repair?
Now here is the next kicker, 1 simple word I used “suddenly”. Did you know a lot of policies don’t cover busted or frozen water lines, because it’s considered lack of maintenance? Some won’t cover damage if it was a leak that started out slow and happened over a long period of time. Again, its maintenance. But how are you supposed to maintain something that is inside the walls of your home?? This is why it’s important to ask your current agent these questions. Find out BEFORE the damage happens and you’re left with little or NO coverage.

Question 2:

I know some of you are thinking “I don’t even know what an ice dam is”. Well we do, and I’ll explain. Without getting too technical, ice dams form on the very edge of your roof after a good snowstorm. They form when the snow/ice begins to melt off your roof. Then at night the air is below freezing again so all the water running off the edge of your roof, re-freezes and forms a solid block of ice. Now the next day the thinner layers of ice/snow on the upper sections of the roof start melting again but since you have a solid chunk of ice at the bottom…. The water will collect and start backing up under your shingles. This causes water leaks in your attic and down your exterior walls in some cases. So, I’ll ask again, do you have coverage for this? A big portion of policies do have coverage for this, but there is still a large group of carriers that don’t include, or even offer it as additional coverage. Time to ask your agent again, huh?

Question 3:

This is an excellent question. Who cares how you answer the other two questions if your policy will only pay for 50% of the damage! So do you have replacement cost (100% payout minus your deductible), OR do you have Actual Cash Value (100% payout minus deductible minus depreciation)? Check out this link for a detailed breakdown of the coverage options available in the market.
http://www.codybarnhartagency.com/uploads/1/3/9/2/139223289/home_insurance_101-a.pdf
 

All 3 questions are critical to your satisfaction during a claim. They can make the claim process simple or frustrating, and, save you thousands or cost you thousands. Do you really know the answer to them? Or did you answer something like “I think so” or “I’m pretty sure it does”?
Don’t leave your home to chance or your wallet at the mercy of one bad claim. Call me, text me, find me on Facebook…. Email me. Either way let me help you figure out if you are properly prepared and getting the best bang for your buck.
Farmers has a solution to each of these situations, does your carrier? Contact me today, let’s talk and find out why I’ll be the last insurance agent you need. - Cody
 
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OK, we have all been here at some point, or know someone who has. We pay for insurance on a consistent basis, heck, we are even told it’s the law for auto insurance. Inevitably something happens, a fender bender, hailstorm, or you are rear-ended. Now its time for your insurance to do the paying for a change, right? In theory you pick a body shop, drop off your vehicle, and a week or so later you pick up your prized ride and it’s as good as new. The body shop collects your deductible, and you drive away happy hoping to never see that place again.

But we all know someone, or have been through it personally, that it didn’t go so well. Maybe there was a struggle to get the proper payment from your carrier. Maybe your agent just wasn’t as helpful as you needed. Maybe you were only paid for part of the damage as a result of some loophole in the fine print. Everyone of us can relate to some type of bad insurance experience.

As an agent that truly takes pride in what I do, the role I play in making peoples lives whole again…. I hate hearing these stories. Frankly, I hear them all to often. Now, I’m not saying that all of the stories I hear is the company to blame. Sometimes, we the customer, can get a touch out of line with expectations. And sometimes it’s just a lack of communication from the agent as to what is and isn’t covered. But I feel part of my role as your agent is to help manage those expectations. To set the stage for what will or won’t happen during your claim.

Not all insurance policies are created equal. Just because you are sold a “full coverage” policy, does not always mean you have the “full package”. The number one complaint I have heard is “I thought I had full coverage”. That is something I never want to hear from my clients. That statement is typically an indication of my wrongdoing. After-all, you trusted me with your policy. You trusted that I understood your needs and gave you the best policy for your budget. Times today dictate that insurance is largely price driven. The majority of consumers today have been pushed in the direction of “we can save you money”. We all know the commercials, the catchy characters, humorous skits, the theatrics that promise unicorns and rainbows for half the cost. But that’s false. It is a very rare scenario when you are able to switch carriers, gain coverage, and still save hundreds. Truth is, all carriers want the top tier clients and once we land them, we work hard to keep them by offering the best rates possible.

But for the top tier carriers, those commercials should instead say something along the lines of we can save you thousands during your next claim. The true comparison of policies comes not in the face values on the quote sheet, but in the fine print of that policy. The language that tells you what is covered, how its covered, and what it is protected against. Such things as will you get aftermarket parts on your vehicle, or does your carrier offer OEM parts replacement? Will you be paid to have new parts of some sort or used parts put back on? Will they pay for the full replacement value of your vehicle, or will you be given some sort of value that’s between scrap and market value? Does your carrier offer a brand-new vehicle if your 1 yr old new purchase is totaled? What about rental car coverage? Do you have it? How much will they pay for a rental if you need it? How long? Will you have to prove you actually paid for a rental? Will they pay up front, or will they reimburse you? Do you see what I mean?

Full coverage doesn’t always mean what consumers think. What about if you get in that accident and it is your fault, will your rates go up now? Glass coverage, how much out of pocket do you have if you get a rock chip or need a full replacement? Did you know that some new vehicles today require calibration of that new windshield that can cost upwards of $1,000? Even further, if you total that vehicle, you just hit and it cost $32,000 to replace how much will your policy pay? $25,000? $50,000? $100,000? What about medical expenses for the folks you just hit? Do you think $25,000 will go very far these days? These are just a few of the questions you need to be asking when you get new insurance quotes. Heck ask them about your current policy. It is very easy to get stuck on the words full coverage, and think you have the best policy. Reality, however, says that you may be shocked by how little will be paid out when you need it most.

Ask yourself this, if you were given the option to only have $500 out of pocket in an accident or $20,000 out of pocket what would you choose? …WAIT! Before you answer that here’s the kicker. Both of these were quoted at full coverage. Both policies are being applied to the same accident. The policy that is $500 out of pocket will cost you $100 per month. The policy that is $20,000 out of pocket will cost you $85 per month. Now, what would you pick? That seems easy right? But you will be surprised at how many times the $85 policy wins. Simply because its cheaper and was not fully explained why it was cheaper.
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When is the last time you actually talked to your agent and had a policy review? Do you know what would happen if you caused an accident? This is what we do, this is what I train my staff to look for. We may not always be the cheapest policy per month…. but I can promise you will be offered a policy that is cheaper in the claim. If you want to learn more or would like to have your current policy reviewed, please reach out. I will personally reach out to you and find out if there is anything we can do to put your family in a better place. - Cody