Let's face it, at least in the financial world, 2022 hasn't been a great year so far. Stock and bond prices are down and inflation is up. And if that wasn't bad enough, there's more discouraging news. If it hasn't already, your homeowners insurance premium is almost certainly about to take a big step up. While the last few years have treated us to repeated hail storms, and the ensuing automobile repair and roof replacement claims, the Marshall Fire is now making insurers re-think another risk factor - fire. Wildfires were formerly just a concern of those living in the mountains. Now the Marshall Fire, and numerous other smaller grass fires, have shown us homes miles away from the forest can, unfortunately, be subject to the same risk. In response to that, insurers are taking action by raising premiums.
But they're doing something else, too, and that's why I'm writing this column. They are increasingly using sleight of hand and non-disclosure to cover up these increased costs leaving potential customers dangerously exposed to financial loss. Insurance companies know price is typically the #1 factor a potential customer will use when evaluating an offer of insurance. So they're covering up a cost increase on one line of the quote by leaving off coverages in other places that customers should probably have. Steve Hakes, of Rocky Mountain Insurance Center, notes he's lately seeing a lot of "trickery" out there. Maybe it's leaving off the Law & Ordinance rider, or offering a too small Extended Dwelling rider, or using Actual Cash Value terms instead of Replacement Value. Insurers are skimping, and that's not good.
At the end of the day, it's important to remember that cost isn't everything. Beautiful as our state is, Colorado also seems to offer disaster after disaster and insurance companies are now pricing their policies accordingly. However, I'm certain many of the people in Louisville and Superior, who are now hundreds of thousands of dollars short in rebuilding costs, would gladly trade an extra $100-300/yr in homeowners insurance premium to get the full amount they now need to put their lives back together. Be certain you aren't faced with a similar problem by paying for the insurance you need, even if it means spending a bit more money. If you're out there shopping for insurance yourself, it's probably wise to have an independent broker like Steve go over any offer with you to see if it truly measures up. Hopefully, you'll never have to access your insurance policies. But, if you do, you want to have confidence you'll have what you need when you need it!