Inflation, labor shortages, the effects of the lingering COVID-19 pandemic and increasingly devastating fires are driving up the cost of insurance for homes, cars and businesses.
“Everything,” Sunnyvale insurance agent said
The pandemic and the high cost of living, especially in the
Huge home insurance payouts by insurers after wildfires caused some providers to flee areas at risk of
The two Nelsons represent the third generation to run the business, after Nelson’s grandfather, Buford, founded it just after World War II. This news agency spoke with him about the state of insurance coverage at a time when prices are rising dramatically for virtually all consumer goods. His comments have been edited for length and clarity.
Q How has the COVID-19 pandemic affected the insurance industry in general, including home, auto and business?
A The insurance industry as a whole has become much more automated. Automation has given people (in the insurance industry) the ability to work from home, but I think the level of efficiency has gone down a bit. In some ways, this sped up the process; in other ways it has slowed our ability to come up with new policies and be effective — it’s kind of a trap. Insurance is a bit slow on the digital side of things, apps, things of that nature. We do a lot of it on the computer, but there are a lot of parts and elements where we still had to enter information and fill it out…on a PDF form by hand. Many things have changed. They have automated it, where they pull this information from other sources.
Q How has the COVID-19 pandemic affected auto insurance when so many people have shifted to working from home?
A lot of companies have stepped up and automatically lowered people’s miles driven per year – it’s all based on miles driven for your rates. Some companies gave discounts, other companies… automatically based everyone on 3,500 miles per year.
Q What has happened to these discounts now that many people have resumed their previous driving habits?
A This has been removed now that things are reopened. Everyone is charged based on their normal driving habits. Some people who work remotely, we keep them low – they just have to provide proof, like mileage records.
Q What affects home insurance?
A What really struck people in
Q How does inflation affect the insurance market?
A Real estate is the hardest hit by rising costs. Whenever we write a home insurance policy or a rental policy or any type of situation where the client covers the property, we have to assess the cost of rebuilding it. Labor prices really exploded in
Q What happened to business insurance costs during the pandemic?
A large part of their costs are related to their income: if you are a restaurant and you serve
Q What advice do you have for consumers regarding insurance?
A Pay attention to your insurance policies. Look at what it cost before, what it costs now. Make sure the coverage amounts are correct. Call your agent and shop around. There’s no harm in sending it out to several other companies and seeing what someone else has to offer and learning a bit about how it works. Get three or four quotes. Try a few different agents – maybe someone like us is independent and can shop in different places. Most people have no idea how insurance works for a homeowner, or even for a car. What is good for one person is not necessarily good for another. It’s not just about saving money, because in the long run it could cost you quite a bit.