Bad weather raises premiums
Berks County and the surrounding region have been fortunate so far to avoid some of the worst in the rising number of extreme weather events across the U.S.
Homeowners claims for wind and hail damage have risen sharply in the last five years though, notes Duane Epting, insurance producer for Strausser Insurance Agency in Hamburg.
“When I think back 20 years ago about how many hurricanes and hail storms there were, it was really insignificant,” Epting said. “Now, you turn on the evening news, there’s always severe weather somewhere.
And even if your property isn’t directly impacted by severe weather, there’s still a chance your wallet could be.
Destructive weather patterns in other states or even on the other side of the country, when especially devastating or affecting enough people, can lead insurance carriers to raise premiums for all of their customers, adds Dave Gallen, president of Gallen Insurance in Cumru Township.
“It depends on the size of the insurance company itself and what their tolerance is,” Gallen said.
Insurance companies buy something called reinsurance, both brokers explained. Essentially, this spreads the risk on claims exceeding a certain dollar amount to one or more third parties.
Companies always insure to a certain threshold, said Gallen. In the wake of a particularly damaging event, however, the amount may require reinsurance, which can have a trickledown effect on customers.
“That can impact everybody moving forward because now the insurance companies, their big brothers pay for it, not them,” Gallen said. “So their rates can go up because of that.”
Epting adds that insurance company representatives have already informed him rates are rising due to reinsurance costs.
“We certainly have many more homeowners claims,” Epting said. “the companies have adjusted rates to account for that, and a lot of customers are taking higher deductibles to help offset the cost and absorbing some of the risk themselves.”
At an individual level, there’s not much that can be done about prices.
What Epting does recommend, since so many weatherrelated property damage claims are to rooftops, is to make sure any work that’s done is accurately documented and up to date.
“If they replace their roof for any reason, even if it’s a hail damage claim, they should report the update to their roof to their agent,” Epting said. “With most companies, the age of the roof does impact the rate by as much as 10-to-15%.”
Gallen feels fortunate Berks has largely escaped the truly catastrophic events — at least since the hail storm of 2014.
Yet, a major incident 3,000 miles away could still be felt in your finances depending on the insurance company.
“If you have a national carrier, they could get hit anywhere and that can affect rates everywhere,” Gallen said. “Your smaller carriers might be in 10 or 15 states, not 48 or 50.”
That being said, while some areas are more prone to these events than others, there’s really no predicting the weather — and no guarantee a smaller carrier’s rates won’t go up.
“It usually helps, but it can hinder,” said Gallen. “You just don’t know.”
Both Gallen Insurance and Strausser Insurance work with a variety of insurance carriers. The most important thing is choosing an agent who understands your needs and will go over every last detail so that you’re prepared in the event a disaster does strike.
“We know our products and you want to make sure your agent is selling you the best product and explaining the claim procedures,” Epting said.