Why is insurance so expensive?

The Almighty Dollar. We can never seem to get enough of it and there is always something going up to off set any increase in income we may have.

One thing people really hate paying for: INSURANCE!

Before I joined the insurance industry I felt about insurance the way everyone else does. I resented paying for insurance. I felt like the companies owed me something for my patronage. I didn’t understand why the premiums would go up even if I didn’t have a claim or loss.

Insurance is not a Tangible Asset until we have a loss. Until we have a loss, it is just another bill we pay and we do not see the benefit it is offering us.

Until a tree falls on our newly renovated home in which we have poured our blood, sweat and tears into. Until our small business is shut down for 6 months due to the irresponsible neighbor tenant having a fire . Until we get rear ended by an uninsured driver that leaves us with a totaled vehicle and a broken arm. Then and only then do we care about insurance.

An average, annual homeowner’s insurance ranges from $1,000 to $3,000 depending on the size and location of your home. An average insurance claim for an Ice Dam in the winter time in New England ranges from $12,000 to $50,000.

How many years of insurance would it cost to fix that? You’d have to pay for 50 YEARS to equal one ice dam claim. Then the same homeowner complains that their rates went up $150 two years later. This is where I have to play Devil’s advocate.

What would happen if one entire region of Connecticut or anywhere in the USA was to be affected by an Ice Storm, a Hurricane, a Fire? This would cost the insurance company BILLIONS of dollars and may bankrupt some of them. The companies have to be prepared for this. They have to buy extremely expensive Re-insurance to cover these costs.

This is why insurance goes up. It is a product. Just like gas, milk, eggs and supply and demand affect it. Insurance goes up so it can protect your home and your assets adequately.

Homeowner and victim of Superstorm Sandy, Justin Rubins, says he considers, “Homeowners insurance one of the necessities of life just like food, shelter and clothing.” (https://www.consumerreports.org/homeowners-insurance/get-the-most-from-homeowners-insurance-after-a-storm/).

Think about that the next time your insurance increases by a couple of dollars. Try to think of it as an investment in yourself, a value that protects you from catastrophe.