American Church Group - Colorado

Auto Insurance Trends: What Does that Mean for your Ministry?

By Dakotah Hueftle, Agent

Are you tired of constantly hearing about rising expenses? It seems like every time I turn around, whether it's at the grocery store, the gas station, or even dealing with insurance, I'm faced with the reality of higher costs. If you're like the average person living in the Midwest, you might have noticed that your personal car insurance rates are on the rise. According to FINN, Colorado has experienced the second-largest increase in car insurance premiums over the past decade. Even Neil Alldredge, the chief executive of the National Association of Mutual Insurance Companies, mentioned to the Wall Street Journal that this could be one of the toughest periods for auto insurers in at least 30 years.

In a recent study by JD Power, it was revealed that car insurers lost an average of 12 cents for every dollar of premium in 2022. And as if that wasn't enough, the consumer price index reported a staggering 16.9% increase in auto insurance for June compared to the previous year. But wait, here's a refreshing change of pace – your church insurance partner, Brotherhood Mutual, is bucking this trend! It's truly a breath of fresh air for me as your trusted advisor to bring you some positive news, something other than the usual doom and gloom of rising costs.

While your auto insurance might not be skyrocketing like the industry average, there's still a new landscape emerging for your church vehicles, volunteer-owned cars, and rented vehicles. Here's what's happening in this new environment:

1. Claim Frequency on the Rise: Numerous studies are highlighting a concerning trend – our driving habits have become less safe. It's a fear that I've shared with many ministries – the risk of a tragic auto accident. Think about how often we load up vans with people and send them off on trips. To mitigate this risk, there are a few simple steps you can take: establish an approved drivers list (we'll even help you screen drivers for free), use a checklist for vehicles and trips, and hold annual meetings with approved drivers to review procedures and emphasize their crucial role.
2. Encountering Uninsured or Underinsured Drivers: Your church members and volunteers are increasingly sharing the road with drivers who have either canceled their insurance or reduced their coverage due to higher costs. If your ministry relies on volunteers using their personal vehicles, their own car insurance would be the primary source for covering claims. To avoid surprises, consider having a conversation with them before any incidents occur. You can use a helpful checklist to guide this discussion. Additionally, ensure that they have insurance and recommend at least $500K in coverage.
3. Higher Claim Severity: Both vehicle repair costs (physical damage) and bodily injury claims have seen an uptick in severity. As the saying goes, prevention is the best medicine. Following the steps outlined earlier can certainly help prevent issues. However, the next best step is having sufficient insurance coverage.

Here are a couple of key things to keep in mind:

• Don't assume your policy covers volunteers driving personal vehicles for your ministry. It's best to check with your advisor.
• Consider increasing or adding Excess Liability coverage. For a relatively modest cost, usually around $300-$400 annually, you can add an extra million dollars of coverage. This coverage would come into play alongside your primary auto policy or non-owned auto coverage in your church policy. In those unfortunate instances, having this coverage could mean the world of difference – whether it's providing for injured parties or easing the financial burden.

If there's one thing I hope you take away from this article, it's the importance of developing solid policies for your vehicles, both owned and non-owned, just as you've done with your child protection plans. Also, take a moment to review your excess/umbrella liability coverage. We're incredibly grateful to serve alongside your ministries and deeply value the trust you place in us as your advisors. Keep up the great work – the world truly needs the positive impact you're making!

Sources:

Auto Lines in 2022 and Beyond: An Actuary’s Detailed Guide to Where Things Stand Today and Why

Auto Claim Severity Up 35% over Pre-Pandemic Rates – LexisNexis Report

Auto insurance is facing its worst crisis in '30 years at least' — skyrocketing rates show little relief in sight. Here's why and what you can do about it