Across North America, hailstorms are responsible for billions of dollars in property damage every year. The increase in the impact of hailstorms has “outpaced advances in detection, forecasting and mitigation.”
That was the matter-of-fact and almost clinical way that the National Center for Atmospheric Research laid things out in promoting the first North America Workshop on Hail and Hailstorms this summer in Boulder.
Stop and consider that for a minute.
What the people who make their livelihood studying weather were saying was nothing less than that Mother Nature is getting the better of them and, by inference, us, despite years of research, lots of super-expensive equipment and the collaborative efforts of what must be thousands of weather scientists nationwide, if not worldwide.
Insurers have been trying to cope with this for some time. Each of the past 10 years has seen well over $10 billion in U.S. insured losses from severe storms. That’s more than twice the inflation-adjusted damage rate that was typical in the early 2000s, and more than four times the rate seen in the 1980s, according to insurance industry experts.
Insurance rates, not surprisingly, have climbed in response to the seemingly unrelenting stream of hailstorms, not to mention floods and wildfires.
So, aside from buying a covered-parking manufacturing company and longer-lasting roofs, what can everyday homeowners and drivers do?
One simple strategy to consider is raising your insurance deductible.
The deductible, of course, is the amount of money you agree to pay for the damage sustained in a car accident or hailstorm before the insurance company covers the rest. The size of the deductible you choose usually depends on the amount of financial risk you are willing to assume, the value of your vehicle or home, along with the likelihood of having to file a claim.
Whether we’re talking about your home or auto, a higher insurance deductible will help shave a few dollars off your premium. It won’t be much, but definitely a few dollars.
More significantly, you’ll likely to see your rate stay constant, if not fall, because a higher insurance deductible will discourage you from filing as many claims with your insurer, especially for smaller issues that crop up.
In other words, most people figure why pay more for insurance for years to come to replace a $1,200 crushed side panel on their SUV when their deductible is $1,000? Same goes for cracked windshields. Submitting a claim every time you get a crack in that windshield will mean higher rates.
To help you decide on a deductible amount that makes the most sense for you, consider the following: Do you live in an area prone to hail damage? What are your chances of being involved in a car accident? How much do you have saved? Will the premium savings make a higher deductible work financially?
If you live paycheck to paycheck and aren’t saving much, you may want to keep your deductibles low. But if you’re good with money and have a nice cushion of savings in the bank, then a higher deductible is something to consider.
Either way, remember that the purpose of insurance is to ensure that you’ll survive financially after an unforeseen event. Insurance is designed for catastrophic events, not life’s everyday mishaps.
CCIG is a Denver-area insurance broker with the full-service capabilities of a national brokerage. We do more than make sure you have the right business or personal insurance policy. We help you manage your long-term cost of risk with our risk and claims management expertise and a commitment to service excellence.
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