Frequently Asked Questions for Insurance and Risk Reduction
Answering questions and providing useful information is one of the most important aspects of providing excellent customer service and the right insurance packages. The Starr Group wholly believes in providing our customers with up-to-date information for every question or concern, no matter the industry. We invite you to read through our frequently asked questions for more information, or to contact The Starr Group with any questions we have not addressed.
Q. How is inflation affecting my insurance premiums?
A. Today’s inflation seems to go from bad news to worse news.
To accurately price policies and better protect policy holders, The Starr Group has always favored the “replace-to-cost” model of evaluating home and property. Written correctly, your home is repaired or replaced regardless of the cost of materials and labor- that’s the good news. The not-so-good news is when the cost soars up, and hence the exposure to the insurance company, it leads to higher premiums. Why?
A recent article in the insurance industry trade publication website PropertyCasualty360 outlined several proof-points to this phenomenon:
- Inflation rates are the highest they’ve been in 40 years (I think we just hit 50 years). According to The Associated Press, the U.S. Bureau of Labor Statistics reported inflation rates in March 2022 at 8.5%.
- Cost of Reconstruction has risen 13.5% since April 2021 and authorities warn that prices may not decrease anytime soon.
- In an effort to stabilize prices and promote employment rates, the Federal Reserve announced its first interest rate hike since 2018.
- 60% of global fuel consumption is in the form of fuel for vehicles. Much of the construction industry relies on the transportation industry to move raw materials to building sites.
- 40% of fuel consumption is used as an ingredient in products which are key to the reconstruction industry: asphalt shingles, furniture, carpets, insulation, paint, tires, plastic parts and containers, plywood, adhesives, epoxies. As the price of fuel rises the price of these items rise as well.
- Labor costs increase 10.4% since April 2021 because of compensating the skilled workers commuting to jobsites.
With much of the population spending an extraordinary amount of time at home for better than 24 months, many homeowners began to reinvest in their properties, repairing, remodeling, or upgrading features. And they’re feeling the pinch of higher labor costs as well:
- Roofer costs are up 12.6%
- Electricians are up 8.5%
- Overall cost to rebuild a property is at minimum 7.14% higher than last quarter!
Other factors affecting volatile construction industry rates include disruption of supply chains, high demand for materials, and panicked purchasing (think toilet paper hoarding in a crisis).
The Starr Group can help make sense of the sudden market shifts by staying on top of monthly pricing updates. If there is an abnormal increase in your premiums (higher than insurance industry average –right now 6% or higher), we will contact you and shop for either better pricing or better value for you.
That is a reminder of our long- standing promise to you in these unprecedented times.
Q. Why do my home insurance rates go up?
A. We focus on the cost to rebuild a home and, therefore, the cost to realistically and adequately insure it.
As a homeowner, you know what you paid for your home or what homes in your neighborhoods are selling for. However, you may not know about today’s reconstruction (not new construction) processes and costs.
Reconstruction costs determine insuring the home to rebuilding cost.
Reconstruction cost is what it would cost to rebuild a home using a design and materials similar to the original home. This amount could be (and usually is!) much higher than market value of the home.
Several factors determine the cost to reconstruct or replace a home. All of them are important:
• Age of the Home
• Building Codes
• Demolition/Debris Removal
• Top Down, Not Bottom Up
• One versus Many
• Custom Features
These are just some of the factors that can affect the cost to reconstruct a home. Click the thumbnail to download the pdf for details on each factor on the list. It’s important to consider all of them when determining the insured value of your home.
Q. What do I do in the event of an auto accident or loss?
A. In the event of an accident or loss, follow these easy steps:
- Obtain names, addresses and telephone numbers of all persons involved and witnesses.
- Do not admit liability.
- Immediately make notes of details of accident such as traffic lights, weather conditions,
direction cars were traveling, etc.
- Identify vehicles involved and where they can be inspected.
- Complete this report even if the accident seems minor.
- Report to your insurance agent immediately.
Download the fillable Accident Form and provide a copy to your insurance agent!
Q. How often should I contact my insurance agent?
A. In order for your insurance policy to fully cover your family and your personal assets, your insurance agent needs to know when there is a life-changing event in your life. That way, your agent can update your policy, minimize your risk and increase your peace of mind. Some events that your insurance agent needs to be made aware of:
- Renovations or Repairs to your home.
- When you are married, or have an addition to your family either a birth or adoption.
- When you sell or buy a home.
- When you buy a new vehicle, or recreational vehicles such as motorcycles, snowmobiles, jet skis, RV, ATVs, boats, etc.
- When you have a newly licensed driver in your home, or another driver who will be using your vehicle.
- When you have a dependent child entering college.
It is best to communicate any changes to your agent when they happen. However, it is a good idea to assess your living situation annually and communicate any changes to your agent. If you have any questions — at any time — call our office to speak to a live, licensed and local agent: 414.421.3800