KRMG In Depth: Tackling the high rates of home and auto insurance premiums

Consumers have seen the premiums for home and auto insurance climb steadily over the years, but recently those prices have spiked much more rapidly, especially for auto insurance.

“If you’ll pardon the expression,” Oklahoma Insurance Commissioner Glen Mulready told KRMG Wednesday, “it’s sort of the perfect storm.”

He said the issue is “nationwide. It’s not just an Oklahoma thing, it’s across the country.”

[Hear part 1 of the KRMG In Depth Report on the cost of insurance premiums HERE]

Mulready said general inflation is part of the issue, but there’s also been a withdrawal of capital from the reinsurance market, which has made the cost of business more expensive for insurers - who pass those prices along to their customers.

The number of claims due to storm damage have risen as severe weather outbreaks have become more common in parts of the country, a possible ramification of a changing climate.

Auto parts have been in short supply, as more Americans apparently prefer to keep and repair older vehicles instead of buying new ones.

Knowing the “whys” behind the higher prices, though, doesn’t do much to help alleviate the situation for consumers.

However, there are strategies they can employ to try and lower their out-of-pocket costs, while still complying with the law and protecting their homes and vehicles.

[Hear part 2 of the KRMG In Depth Report on the cost of insurance premiums HERE]

Mulready tells KRMG it takes some work, but the first piece of advice his department offers is to shop around.

It’s helpful to have some questions ready before talking to an agent.

For example, ask about discounts on an auto policy for having a good driving record, customer loyalty, good grades in school, or certain safety features like anti-lock brakes.

Ask about raising your deductible, if possible, to lower your monthly rate.

If your premium is more than ten percent of the value of your vehicle, some experts advise dropping comprehensive coverage and simply carrying a liability policy (the caveat there - only do so if you could afford to replace the vehicle should it get totaled).

To save money on homeowners’ policies, ask about discounts for safety features - the Oklahoma Insurance Department website lists several:

• Impact-resistant (hail-resistant) roofs
• Dead-bolt locks or certain other security measures
• Approved electronic burglar alarms
• Smoke alarms, sprinkler systems or other fire prevention systems
• Age of your home
• Heating, electrical or plumbing updates
• Companion policies such as your auto policy with same company
• Senior citizens
• Personal property identification marking
• Credit score
• Continued policy renewals
• Claims free discount

Mulready tells KRMG the OID is also working on helping to pass a piece of legislation dubbed the “Strengthening Oklahoma Homes Act.”

It would provide money for Oklahomans who are repairing or replacing their roofs to use a higher standard of construction called “FORTIFIED,” which is recommended by the Insurance Institute of Home and Business Safety (IHBS).

He says it won’t even require lawmakers to appropriate any money, he just needs their permission to disburse some leftover OID funds as grants to homeowners.

The bill easily cleared a vote in the Oklahoma House, and is currently under consideration in the Senate.