HOUSTON – We are hearing from a lot of you who have sticker shock when it comes to insurance rates right now. And that’s if the company will even renew you. A lot of people are being denied insurance coverage.
In this week’s Ask Amy, Amy Davis looks into what’s going on with rates and how technology is playing a bigger role in determining how much you will pay.
Why are we paying so much more for insurance?
Leash Yu with Agency Yu Higginbotham explains that insurance companies have dealt with record levels of catastrophic claims.
- 2019 = $38 billion
- 2022 = $76 billion
This is why insurance companies are struggling to stay in business and why they are charging you so much more.
“Right now, it’s a crazy situation because we’re seeing 30% renewal rates year over year over year. So, it’s probably the third year in a row that we’re seeing a 30% on average rate increase,” said Yu.
Insurance companies use technology to determine rates
Yu explained how insurance companies help determine what you will pay. We know insurance companies have been using drones for some time now to take a look at your roof and other things.
But now a lot of companies are also using satellite images.
Yu: “Being able to look at the quality of the roof. But then how many trees are around your roof. They’re looking for certain things like the, the. Is it stained? I don’t know. Have the resolution on the satellite imagery. Images are good enough to show the curling of shingles, but they can definitely spot holes and damage. But they’re looking at all kinds of things right now from the satellite images. Of whether or not they want to ensure your roof. And so you could have a brand-new roof within last five years. But the satellite imagery that that that shows that, hey, this roof doesn’t look good, and that satellite image will tell the insurance carrier, hey, we shouldn’t insure this house.”
Amy Davis: “And so, have you had any success with customers appealing when, when an insurance carrier says, no, we’re not renewing you or you don’t qualify, you know, maybe they use one of these satellite images. And for some reason, they say we don’t want to cover you. Can I, as a homeowner, say, oh, would you consider this, this and this?”
Yu: “Yeah, that’s a great question. Most of the time the carriers, they’ll tell us the reason why we’re not doing this is because the satellite image shows that this roof is in, not in that good condition. And there’s trees leaning on the house. The homeowner can choose to cut the trees down, trim them really far back, you know, spray the roof down with algae side and do another roof inspection. Sometimes the carriers will take the updated roof inspection. That’s up close and personal versus a satellite image.”
Yu says even if you are quoted a higher rate, if possible, you should stick with whatever insurance company you have right now. He says bundling home and car insurance could also help save you money.
One note: Be suspicious of any insurance company that gives you a super low quote. The company could go out of business and pay you nothing at all if you need it.
By the way, we’ve told you before flood insurance is also at a much higher rate this year - that is set by FEMA. Yu suggests that everyone in Houston get flood insurance. We also know there’s a more active hurricane season expected this year.
RELATED: Shopping private flood insurance options
Your credit score can impact your insurance rate quote
Yu says most people don’t understand that the credit has a lot to do with the rate that you’re getting on not only a homeowner’s insurance, but on your auto insurance as well, that insurance carriers don’t really like to talk about it.
Yu: “They call it an insurance score. Then I try to describe the insurance scores, just black box of parameters that the insurance carriers put your name and date of birth and your driver’s license into, and it spits out a rate. But in this black box is your credit score. It is, you know, and there’s all kinds of parameters that are in it that they don’t want to tell you what it is because it’s secretive. But what they’re trying to do is, is establish how likely you are to file a claim. Right. And if the parameters are out of line, your rates are going to be higher if they’re if their parameters or the things that they want you to, to, to to look like your rates are going to be lower.”
Amy: “Because you mentioned that I could have the same exact home as my neighbor, and we could both get completely different scores.”
Yu: “Completely different. Totally different scores that equate to totally different premiums. People don’t understand that. They actually do earn their rate. You know, in a lot of it has to do with the prudence of your finances. The more prudent you are with your finances, generally speaking, the lower your rate’s going to be. Yeah. An equal thing to credit is how many claims have you already filed. Claims credit history big impact on your rate.”
Watch the full interview with Yu in this Ask Amy episode all about insurance rates.
RELATED: What can you do if you can’t find insurance coverage?