While we don’t know exactly what’s coming this year, I can tell you some of what we’ve heard from our company representatives and underwriters. Here’s what’s going on in the insurance industry now and some of what we expect to happen in the short-term:
For Autos:
Some companies are loosening restrictions and are trying to grow their auto business. This is good news for you as rates loosen up, providing opportunity to save money. Auto insurance rates have risen over the last few years in response to major claims payouts due to the May 2023 massively destructive hailstorm and hail season as well as the increased expenses associated with repairing modern vehicles with all their associated technology. For example, a poll was recently taken asking respondents how much they thought it would cost to replace a bumper on a midsize car. They said about $1,500. The response of body shops was closer to $4,000. The new technologies built into cars can be helpful in preventing accidents and mishaps but another study actually shows that drivers pay less attention than ever because they’re relying on technology to warn them of danger rather than paying attention to road conditions themselves. Will rates ever go down? Not likely but they can subside. Insurance companies now are very sensitive to payouts and reward those who are safe, but to those who are riskier (violations, claims) the rates will be higher. It’s important to remain safe, drive safely, avoid aggressive driving, and avoid filing claims unless you need to. For example, if you backed into a cement post and damaged your bumper. You’ve got a $1K deductible and the repair is estimated at $2,250. It would probably be wise not to file a claim, as you’d only be reimbursed $1,250 after you paid your deductible. You’d also see a claim surcharge, and if a younger driver caused the damage you’d see higher rates as a result of the driver’s age, and you’d also likely see a claims-free discount disappear. The net result of a lower payout claim could more than exceed a $2,000 increase. Would it be worth the claim? No. And that particular collision claim could stay on your record for 5 years. Things are different in the insurance world. We don’t set the rates and rules, but we can try to find companies that are “gentler” and more lenient. But be aware of what’s going on. Always ask us if you’re unsure.
For Homes:
We’re continuing to see changes. Several companies that stopped writing home insurance 1-2 years ago are talking about reentering the market sometime in 2025. Several companies that jumped into the Colorado market a few years ago are long gone. They had very low rates and tried undercutting the mainstream companies. And they did, but they didn’t have sufficient money to pay out claims in May 2023 and so they’re gone. The companies we work with are longstanding companies with robust coverage options. We only write with companies that have proven themselves with coverages, claims and credibility … and are financially rated by A.M. Best as A, A+ and higher. In addition, deductibles are changing more as insurance companies are trying to find ways to have sufficient funds to pay out claims without going insolvent. We’re seeing more companies introduce percentage deductibles and roof payment schedules, which simply means the older the roof is the less money the insurance company pays in replacing it. Some companies won’t write home insurance where the roof is more than 10 years of age. Some put you on the roof payment schedule after 10 years. Some companies won’t write new home insurance if you’ve had a non-weather claim in the first year (e.g., theft, burglary, fire, water backup, etc.). Be judicious in filing that claim, and if you’re ever unsure about filing one, we can help counsel you to make a wise decision as home claims stay on the record for 5 years. It’s definitely a different world with home insurance than it was only 3-4 years ago. But we work hard and take pride in finding you solid companies with a solid set of coverages that homeowners use and need. One question we’re getting asked is: “How will the California fires affect us?” That’s a great question and we don’t completely know yet. Insurance companies are observing though and seeing how the California insurance companies deal with this. The reality is, Colorado insurance has ben evolving to deal with catastrophes for some time. In 2025 it’s expected a version of the FAIR Plan insurance to come out to help those in uninsurable areas or help those whose rates have gone to high levels. Before you want to jump to something like this though you’ll want to know the pros and cons of such insurance, as these plans have serious limitations. We’re here to help you and our Renewal Team always do their best to educate and advise.
For Landlord Properties:
We’re getting wind of several companies not writing landlord properties any longer starting in Q2. We’ll learn more about that as the year progresses. We also have seen a number of companies, that will write landlord insurance, cap the dwelling coverage at $1M. Deductibles are increasing as well. Claims are becoming weightier for renewal factors and new business. For those of you with investment properties, make certain you require tenants carry their own renters insurance. You shouldn’t have to pay for damages caused by tenants. That’ll also protect you from adding unnecessary claims on your insurance. In general we’re seeing landlord insurance rates increasing but nothing significant.
For Condos:
Many companies have stopped writing condo insurance altogether. A few companies will write condo insurance but limit the “loss assessment” coverage to $2K, or $5K. About 10 years ago a loss assessment claim might’ve run around $3,000. About 5 years ago a loss assessment claim might run around $14,000. Last year two HOAs in Lafayette recommended nothing less than $33,000 for loss assessment coverage. As a result of these claims and high payouts, insurance companies are pulling back on what they cover. I suspect most companies still writing condo insurance will do so but with limited or capped “loss assessment” coverage.
For Umbrellas:
The prices have been increasing on these too as liability claims continue to increase. There typically are more severe claims these days so the time of low umbrella rates have all but vanished. However, insurance is always your first defense and we always recommend an umbrella for you as a buffer against any lawsuit/claim.
This is simply the state of insurance in Colorado. The reality though, is that insurance continues morphing and changing and undergoing a number of rapid changes across the country due to the frequency and intensity of storms and other types of catastrophes. The higher rates are frustrating and sometimes difficult to manage, but insurance companies need to position themselves such that they can pay out claims when that next big storm rolls through or possible large fire. At Rocky Mountain Insurance Center we not only specialize in recommending solid coverages but we also specialize in finding you affordable rates so that, as I tell my team, if you’re in a claim situation and sitting under that tree, you’re not wondering if you’re covered, you’re confident that you are covered. Always feel free to reach out with any questions you may have. Thank you so much for your loyalty and trust in us. We appreciate all of you. Here’s to a good 2025!
