Premiums contribute to insurance spending boost in 2012, survey says

Fear is another likely reason, according to adviser

Jan 14, 2013 @ 3:15 pm

By Liz Skinner

More than a third of Americans spent more last year to insure everything from homes, cars and boats to their own life and health.

About 37% of Americans spent more on insurance in 2012, while 52% paid the same amount as in 2011 and 7% saw insurance bills fall, according to a Bankrate Inc. survey of 1,003 U.S. adults earlier this month.

Of those who paid larger 2012 insurance bills, 62% said the increase was because of higher premiums, the survey found. About 12% paid more because they added coverage for a new home, vehicle, boat or recreational vehicle; 9% due to family changes such as having a baby or getting married, and 4% was because they boosted coverage on an existing policy.

Insurance analyst Doug Whiteman of Bankrate, which conducted the survey for the first time this year so has no comparison data for earlier years, said the firm hasn’t seen any evidence that insurance costs is rising faster than inflation overall. He blamed some unique events in 2012.

“There are special circumstances that contribute to insurers’ rising costs, including disasters such as Superstorm Sandy that puts pressure on home insurers and low interest rates that are hurting returns for life insurers,” he said.

Financial adviser Jude Boudreaux of Upperline Financial Planning LLC said the nation’s financial crisis in 2008 left Americans feeling more afraid. Many are increasing their insurance coverage to quell fears about financial insecurity.

“Beyond auto and home insurance that most people have to have, buying other policies are all voluntary decisions driven by fear,” he said. “As people become more afraid, insurance is a natural place to turn for comfort and peace of mind. “

Mr. Boudreaux said people also may be spending more because there are more insurance products available, such as long-term-care policies.

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