Latest / Talking FACS / Rising Homeowners’ Insurance Costs

Transcript

Rising Homeowners’ Insurance Costs · Talking FACS

• 0:01
  Welcome to Talking Facts.
• 0:03
  What you need to know about family food finance and fitness.
• 0:07
  This nationally recognized award winning podcast is hosted by the University of Kentucky Family and Consumer Sciences Extension Program.
• 0:16
  Our educators share research knowledge with individuals,
• 0:19
  families and communities to improve quality of life.
• 0:25
  Hello and welcome to Talking Facts.
• 0:27
  What you need to know about family food finance and fitness.
• 0:31
  I am your host,
• 0:32
  Mindy mckelley Extension Specialist for instructional support with family and Consumer Sciences Extension.
• 0:37
  We are housed in the Martin Gatton College of Agriculture,
• 0:40
  Food and Environment.
• 0:42
  My guest today is Dr Nicole Heff,
• 0:44
  assistant extension professor for family finance and resource management.
• 0:48
  Welcome you both.
• 0:49
  Hi,
• 0:50
  Mindy.
• 0:50
  So we are going to talk about a topic that many people probably don't like to talk about very often and it,
• 0:57
  it's not something they probably even want to think about very often,
• 1:00
  but we're gonna talk about the rising home insurance costs.
• 1:04
  So home insurance rates have been on the rise since the pandemic and are predicted to increase an average of 9% in 2023.
• 1:13
  Why are we seeing this rapid increase in homeowners insurance costs?
• 1:18
  Yeah.
• 1:19
  Uh you mentioned,
• 1:19
  it's something we don't like to talk about,
• 1:21
  but I promise is something most homeowners have noticed is this increase.
• 1:26
  And yes,
• 1:26
  it is predicted to increase even more as 2023 progresses.
• 1:32
  And,
• 1:32
  um,
• 1:33
  you know,
• 1:33
  there really are several factors that are contributing to the rising homeowners,
• 1:38
  um,
• 1:38
  insurance rates.
• 1:39
  And so,
• 1:40
  you know,
• 1:40
  one of the things is the increased experience of,
• 1:45
  of costly natural disasters here in Kentucky.
• 1:48
  And so,
• 1:49
  um,
• 1:49
  in the last 10 years,
• 1:51
  we've had about a billion dollars in claims in Kentucky alone.
• 1:56
  And then several million of that are from the last two calendar years.
• 2:00
  And so we've seen just a steady stream of very costly national disasters in our state.
• 2:07
  Um,
• 2:07
  but other things are,
• 2:09
  you know,
• 2:09
  kind of culminating.
• 2:10
  So inflation cost and then the higher cost to repair homes that,
• 2:16
  you know,
• 2:17
  that,
• 2:17
  that have claims.
• 2:18
  And so together these are causing,
• 2:22
  um,
• 2:22
  homeowners insurance rates to spike nationally.
• 2:25
  And,
• 2:26
  uh,
• 2:26
  Kentucky is unfortunately no exception.
• 2:29
  And I'm sure seeing the current situation with a,
• 2:34
  a another hurricane hitting,
• 2:35
  hitting the southeast that we're gonna just see those,
• 2:39
  those costs continue to rise.
• 2:40
  So,
• 2:41
  what are some ways that our homeowners can save money on the insurance costs?
• 2:46
  Are there other things that they should really tackle first?
• 2:49
  Yes.
• 2:50
  So,
• 2:50
  so,
• 2:50
  I mean,
• 2:50
  really,
• 2:51
  anytime we're met with a financial stressor,
• 2:53
  we can do one of two things we can increase our income,
• 2:57
  which is not the easiest thing to do.
• 2:59
  Many of us don't have a lot of control over that or we can reduce our expenses.
• 3:04
  And this isn't something that's fun to do,
• 3:07
  but it is often where we have a little more control.
• 3:10
  And so my first suggestion with any financial stressor is to,
• 3:15
  to look for ways to improve your finances.
• 3:19
  So that would also be my first recommendation for homeowners is to look where can,
• 3:24
  you know,
• 3:25
  look for ways to build healthy savings to lower outstanding payments.
• 3:29
  So there's things like student loans,
• 3:31
  credit cards or other high interest,
• 3:33
  consumer debt.
• 3:35
  And so when we look for ways to manage our money wisely,
• 3:39
  it can help us prioritize our spending.
• 3:42
  And you know,
• 3:43
  we can often,
• 3:44
  there are some pockets in our,
• 3:46
  in our budgets that are likely discretionary.
• 3:49
  And so where are those spending leads those frequent small purchases that can drain your account over time?
• 3:57
  And so this may mean cutting back on things like entertainment or travel or eating out or better prioritizing for your groceries.
• 4:06
  When you meal plan just,
• 4:08
  uh,
• 4:08
  groceries are often a discretionary fund you have to eat and those prices are often on the rise too,
• 4:15
  but we can plan and we can shop wisely.
• 4:18
  And when we examine our spending habits,
• 4:21
  it allows us to identify how to free up money for those things like essentials,
• 4:26
  those,
• 4:26
  those things like homeowners insurance costs,
• 4:28
  which we need.
• 4:29
  And we have no control over their rising costs.
• 4:31
  And so we need to free up our income to,
• 4:34
  to meet those increased expenses.
• 4:37
  So,
• 4:37
  what about credit?
• 4:38
  Does your credit score impact the cost of homeowners insurance?
• 4:42
  It does.
• 4:43
  Yes.
• 4:43
  And so that is,
• 4:44
  that's the second thing that homeowners can do is to work to establish and maintain a solid credit history.
• 4:52
  So having a good credit,
• 4:54
  um,
• 4:54
  it can reduce your insurance cost and in much the same way,
• 4:58
  a poor credit history or a low credit or it can label you a risky consumer and that can increase how much you pay for your homeowners insurance to protect and build your credit.
• 5:10
  Always make sure you pay your bills on time that you keep your credit balances as low as possible,
• 5:17
  never take out more credit than you need.
• 5:19
  So,
• 5:20
  you know,
• 5:20
  get in the habit of saying no to the checkout stores,
• 5:23
  especially who,
• 5:24
  who try to encourage you to save 10% or 20% and open a store credit card.
• 5:28
  Say no to those.
• 5:30
  Um,
• 5:30
  only say yes to the credit that you need and regularly excuse me,
• 5:35
  monitor your credit report so that you can look for errors and fraud if anything needs correcting or reporting.
• 5:42
  And if you have recently improved your credit,
• 5:45
  your uh credit standing,
• 5:48
  talk about that with your insurer to see if you're eligible for discounts if your credit score has recently risen.
• 5:54
  And so if you've been working to build or establish,
• 5:58
  uh,
• 5:58
  your credit history,
• 5:59
  then talk to your insurer about if it's,
• 6:02
  if,
• 6:02
  if you now qualify for better rates,
• 6:06
  is there anything that homeowners shouldn't do when looking for ways to lower insurance cost?
• 6:12
  Yeah,
• 6:12
  I think we can be tempted sometimes to cancel or to reduce our insurance coverage to save money,
• 6:18
  especially if you've paid off your mortgage.
• 6:21
  But resist this temptation because as we've experienced firsthand across Kentucky in the last couple of years,
• 6:30
  severe weather,
• 6:31
  it'll come quick with little warning and it can cause major devastation and so not being properly insured,
• 6:39
  it really could impact your financial future.
• 6:42
  It could quickly deplete your life savings or your retirement fund don't reduce your coverage.
• 6:48
  And in fact,
• 6:48
  don't assume that your current coverage is adequate.
• 6:52
  That's something that uh many homeowners weren't necessarily prepared for who experienced the natural disasters,
• 6:58
  realizing that they weren't properly insured because of those rising costs of inflation and replacement cost to repair their homes.
• 7:07
  And so,
• 7:08
  you know,
• 7:08
  this is your reminder to,
• 7:10
  to reach out to your agent to make sure that you are properly insuring your property so that if you experience any kind of damage,
• 7:20
  you need to file a claim that that your coverage considers inflation rates and rising home prices and that it doesn't wipe out savings quickly.
• 7:31
  So what top three suggestions would you recommend for homeowners to consider when they're looking to lower their insurance rates?
• 7:39
  Well,
• 7:39
  in addition to just some of the general tips that we've already discussed.
• 7:43
  Shop around to be a good consumer.
• 7:46
  You very seldom go with the first quote that that you receive and insurance should be,
• 7:52
  should be no different.
• 7:53
  So shop around,
• 7:55
  um,
• 7:55
  many times,
• 7:56
  homeowners don't regularly shop and they may not have shopped for insurance since they bought their home.
• 8:01
  And for some people that was maybe several decades ago and so get different prices from,
• 8:07
  from different providers,
• 8:09
  compare multiple quotes and determine who can give you the best rate and be sure that when you're checking your,
• 8:17
  um,
• 8:17
  when you're doing some comparison shopping to make sure that a lower premium doesn't mean less coverage.
• 8:23
  And so make sure you are comparing apples to apples.
• 8:26
  So the first tip is shop around,
• 8:28
  uh,
• 8:28
  the second is to claim your discount.
• 8:31
  So just like if you're talking to your insurance agent about if you qualify because of a good credit standing there may be other eligible discounts that can really lower the cost of your policy.
• 8:43
  So maybe if you have done any,
• 8:45
  um,
• 8:45
  home upgrades.
• 8:46
  So maybe you've upgraded your roof or electrical or plumbing,
• 8:50
  maybe you have installed a security system.
• 8:53
  Um,
• 8:54
  maybe it's something simple like installing some fire extinguishers can lower the cost of your homeowners insurance policy.
• 9:02
  You can also look for ways to bundle service that can,
• 9:06
  can sometimes come with a discount if you bundle home or auto policies.
• 9:11
  Some companies have a loyalty programs that can reduce your cost and also payment method.
• 9:20
  So if you choose to pay via an auto draft,
• 9:23
  that can lower your cost.
• 9:25
  If you pay in full,
• 9:27
  that can lower your cost for the year.
• 9:29
  Maybe you're a non smoking household,
• 9:31
  there are even discounts for occupations such as um emergency responders or active military and companies don't always advertise their discount programs.
• 9:43
  And so take the initiative and talk with your insurance agent about what discounts you may qualify for.
• 9:51
  And sometimes your employer might have a agreement with the different insurance agencies who will then pass on a discount to you.
• 10:00
  Yeah.
• 10:00
  Yep.
• 10:00
  So your company may also have a policy.
• 10:02
  That's a great tip,
• 10:03
  Mindy.
• 10:04
  And then the third is raise your deductible.
• 10:06
  And so this one comes with a little bit of caution.
• 10:09
  Um And so if you can afford to pay more out of pocket initially,
• 10:14
  you could lower your premium cost by raising your deductible.
• 10:18
  And so,
• 10:18
  you know,
• 10:19
  when a homeowner files a claim,
• 10:21
  uh depending on what their policy is,
• 10:23
  they will need to pay a certain amount of money upfront.
• 10:26
  That's what's known as your deductible.
• 10:28
  And then your insurance will cover all or a portion of what remains.
• 10:31
  And so the higher the deductible,
• 10:33
  the more a homeowner can save on their premiums and but only make sure you can afford to pay more out of pocket for that.
• 10:41
  So if you have an emergency fund.
• 10:43
  If you have money set away,
• 10:46
  that could cover that cost a higher um,
• 10:48
  deductible.
• 10:49
  Should you need to file a claim?
• 10:50
  Then that might be another way that you can save money.
• 10:53
  And if you calculate the difference in what the deductible is and what the new premiums are,
• 10:59
  you can use that saving to go into your emergency funds.
• 11:02
  Oh,
• 11:02
  that's a,
• 11:03
  that's a great bonus toy.
• 11:04
  I love it.
• 11:06
  All kinds of ways to make sure that we are properly insured but not breaking the bank to be.
• 11:12
  Yeah.
• 11:12
  And in today's economy,
• 11:15
  it takes brainstorming all,
• 11:17
  all sorts of ways to save money wherever we can and then reinvesting that money into savings and into those,
• 11:24
  those essentials.
• 11:25
  And as you said,
• 11:26
  reinvesting because our home is quite an investment.
• 11:30
  And so we do want to make sure that it is available for us as long as we need to live there.
• 11:35
  Ab absolutely.
• 11:36
  And it,
• 11:37
  it's expensive to move too.
• 11:38
  It's very expensive to move.
• 11:40
  That is exactly right.
• 11:41
  Well,
• 11:42
  Nicole,
• 11:42
  thanks for joining me today.
• 11:44
  I know that this discussion is a little bit painful but it's so important.
• 11:49
  Thank you for having me.
• 11:51
  If you are just tuning in,
• 11:52
  you are listening to Talking Facts and you can find us wherever you listen to your favorite podcast.
• 11:58
  Thank you for listening to Talking Facts.
• 12:00
  We deliver programs focusing on nutrition,
• 12:03
  health resource management,
• 12:05
  family development and civic engagement.
• 12:08
  If you enjoyed today's podcast.
• 12:10
  Have a question or a show topic,
• 12:12
  idea.
• 12:12
  Leave a like and a comment on Facebook at UK F CS EXT or send us an email at UK F CS ext at UK y.edu.
• 12:25
  Visit us online at F cs.uk y.edu to learn more about the University of Kentucky Family and Consumer Sciences Extension Program or contact your local extension agent for Family and Consumer Sciences.
• 12:38
  We build strong families,
• 12:40
  we build Kentucky.
• 12:41
  It starts with us.