 Welcome to Coverage Over Coffee, hosted by AI Mutual. I am Agent Ivory, and here we talk about various insurance topics in a fun and informative way that is easy to understand. Enjoy hot coffee and delicious pastries with like-minded people that are excited about creating generational wealth for their families. Don't forget to like, subscribe, and share the channel. Back everyone to another exciting coverage over coffee. I am your hostess, Nicole Ivory, and I'm very excited today to be talking about insurance and rising inflation, but before we get started, if you could be so kind and like and subscribe and share the channel would be greatly appreciated. Also, if you can click on the bell to receive notifications when I upload additional videos that'll keep you informed once I have more insurance news to deliver. All right, so let's get started. So today we're talking about the insurance and rising inflation, and I don't know about you, but back in school, I was never really taught too much about inflation. And yes, I did go to a business magnet school for high school. So it was, you would think we would talk about those things. Of course, we did at that time learn about banking. Of course, we opened up a banking checking account, right? We actually had Bank of America came up to our school, and I remember receiving my first checkbook. We had checkbooks. I'm telling on my age here, right? So we learned how to balance the checkbook. We learned how to create resumes to go out and get those jobs. So I did have a job in high school, working for one of the oil companies here. So that was great. I'm learning all these things that's going to help me in life to become a better person. But I'm getting my checks. I'm making my money. And actually at that time, I was doing very well. But of course, a lot has happened between then and now. We've been through recessions and everything. And so we've seen how the dollar has decreased in value, how the prices of goods and service have increased in value. And so now, you know, we're all having to deal with this as an adults with inflation. You know, we have like real bills now. You know, back then I probably had what, maybe a $30 phone bill or a beeper. I don't even know what I had then, you know, nothing major because I was living with my family like, yeah, who cares? Right? I'm not paying major bills then. But now as adults, we're paying those major bills. Okay? And sometimes we have two and three and maybe more properties. So we want to make sure that we properly understand inflation and how it affects our daily life. So today we will be actually breaking down inflation for those who really just don't understand it. We need a quick overview. Then also we're going to talk about how it affects our home owners policies, those premiums, also the auto premiums, and then of course those life insurance premiums. So let's get started. So I really love this website here, Investopedia.com has tons of wealth of information. So I will drop this in the links for you to review on your own, but let's see what their definition of inflation is. So inflation is the rise in prices, which can be translated as the decline of purchasing power over time. So let's take a look at this photo that I want to show you so we can learn about it even more. So here we have coffee. And of course this is the coverage of a coffee session. So this is only fitting, right? But how inflation has changed the price of a cup of coffee over time. So as you can see here in 1970, it was only 25 cents. Wow, that's pretty amazing, right? But look, these coins just keep adding up as we keep moving over to the right. Every 10 years it's going up. So in 1980, it's 45 cents, 1990, 75 cents, and in 2000, a dollar. So to me, that's still a great deal to get a cup of Joe like under a dollar, right? In 2010, it started to go over a dollar, a dollar 25, and they say in 2022, it's a dollar 85. Now I buy coffee all the time. I'm sure you all do too. And I'm sure you would agree with me that that figure is probably not right. I don't care if it's an average, it can't be right because at some of the mainstream coffee shops, you're not getting out of there paying less than $2, definitely no less maybe than 250. Okay, I'll give them $2 maybe, but usually it's about 250. All right. But as you can see here again, you know, it's costing more money for the exact same cup of coffee. So this is inflation, you all. So let's look at the three different types of inflation. So here you see they have demand pool, they have cost push and built in. So let's talk about demand pool. Well demand pool, as you can see here is when sneakers are $150 when it used to be $100. Why the sudden extra money? Well it's because the demand for goods and services exceeds the production capacity. Moving on to cost push. Okay. So as you can see here, when production cost increases, the price increases. So helium in this instance was a dollar, now it's $20. So now the gentleman who's selling the balloons has to raise his rates from $5 to $10. Lastly, the built-in inflation. So when prices rise, guess what, wages rise too in order to maintain a living cost. So I like to use the example of real estate because we have seen in the last year how real estate has really just has driven the economy. So with the demand pool, of course, people were ready to buy, buy, buy. They were trapped in our houses all during the crisis that we had in 2020. So they were ready to move. So the demand was high for new properties, or for properties I should say. But the quantity of properties were still low or the same. So of course sellers were able to increase their prices. And then for those new home builders, we know that in order to build a home, especially during the last few years was very expensive due to a lot of material shortages. Remember, we had the whole container, the shipping container crisis. So of course with all of that happening, they had to increase their prices as well, right? To sell those new homes. And then of course, all of these raisins of the prices is going to naturally increase wages. And people did, right? So wages were increased so much so that people were able to give the deuces to employers at a moment's notice to either just not work anymore or hop on to another company who was offering them crazy amount of money to come join their firm. So as you can see here, inflation in the last year or two has just been really crazy. And thus the reason why we're talking today about how this is infecting insurance premiums. So let's talk about real estate. So as you have seen, inflation has done a number on the real estate market, which really has heard our overall economy. So now we're going to move on to cmbc.com. And here we see the 10 states where home insurance rates are rising the fastest. And guess what? And none are New York and California. Surprise, surprise. Okay. But first, when I read this article, I was like, okay, but then I was like, I think they're wrong a little bit. Well, anyway, inflation is a little bit higher now. They stated it was 8.3% in the last 12 months. It's actually 9.1%. Okay. But we'll let them slide on that. They said the cost to ensure your home is up 12.1% on the year. Okay. So of course, these are always averages. They did mention here homeowners in three states have seen their premiums rising more than double the pace of inflation, but they didn't explain who those three were. I know one for a fact is Florida. Okay. And then let's see here, they stated the rising costs were due to a number of things, which we previously already talked about, like the building materials were very expensive. So it did increase, you know, the cost of these premiums. And why is that important? Because when you have claims, right, let's just say something happened to your home, then you have to file a claim. Well now you have to get, you know, a portion of your home rebuilt, right? The cost of those supplies are now higher. So therefore those premiums are going to increase. So yes. So the premiums have increased in these 10 states, you know, number one, they says Arkansas, which is 18.5% Washington, 18.1% Colorado, 17.5%. But I thought this whole article was a little bit misleading because they didn't want to throw in those other three states that have doubled, right? I guess they felt that those are outliners because maybe due to the hurricane and things of that nature. But I just want to tell people who are complaining about, you know, the rates increasing by almost 20%, like for instance in Texas, that there are states that their premiums have actually doubled, you know? So if they're, you know, yearly premium was $2,000, it's actually $4,000 now. So maybe that, you know, 13% increase or 20% increases isn't too bad. But I did want to show you in particular Florida because I have been looking at them a lot lately. And so here, as you have seen, we'll do this here, everybody's advertising to me. It says the average cost of premiums in Florida in 2022 is $3,585, approximately 55% rate hike in the last three years, right? So they have just steadily been going up for the last three years and that's definitely due to hurricanes. But like I said here, they're even talking about a 55% rate hike. That's just so not true. They've actually been doubled in some cases more than doubled. And as we discussed in our last coverage of our coffee session, you know, their governor DeSantis is expected to speak about the insurance crisis on December the 16th. So I'm looking forward to hearing what he has to say. I know everyone's talking about moving to Florida. It's so great. It's so awesome. From an insurance perspective, I'm like, I don't think so. I don't know if I would want to move there. I mean, because due to all of the natural catastrophes that they have there and then the continued increase of premiums with no end in sight, I'm thinking I'm good, you know, where I am for this moment. But if you all love it in Florida, definitely, you know, discussed in the chat, you know, below, let us know what you think about it. Should people move to Florida or not? Or if you're seeing your premiums increase, are they actually doubled, you know, like I'm hearing? Or is it just this 55% increase rate, you know, and if you're in any other state, you know, that we mentioned before, is that about right for your premiums, for your homeowner's premiums? Okay, just let us know. We want to hear. We want to be able to compare to see if what they're telling us is the truth. But yes, please also know any time there's a catastrophe that happens in your area, that state, you know, they're going to go ahead and blanket everybody's premiums. Right. You could say, oh, wow. I hadn't even filed a claim this year, you know, I'm doing great. But yes, but if there, you know, was maybe several tornadoes that were very bad. Or in fact, if there was a major hurricane, like Hurricane Harvey in 2017, everyone's premiums are just going to go up across the board. So just to let you know that. So now we're moving on to auto insurance. And we have a bank rate article here that talks about inflation for 2022. So as you can see, the inflation has gone up average of 4.9% for all auto insurance rates. Okay. And it's affecting 62.5 million policyholders across the country. That's a lot of people. Everybody is going up. Geico is raising their rates in seven states. State Farm is also hiking up their rates in 17 states. They're all asking permission to hike up rates. And guess who gets to pay those rates? We do. So why are the auto insurance rates increasing? Well, of course, what we're talking about today, inflation, as you can see here, the CPI index rose 9.1%. And why is all of this happening? Well, inflation has been compounded by the new and used vehicle markets, right? So everybody wanted to buy cars, get on a road, travel, yay, right? But of course, we had those chip shortages and everything else, and it was very hard and difficult to get those cars. So the cars that were out there were in high demand. Of course, they were able to go up on their prices. And guess what? Insurance carriers are now having to ensure those policies at a higher cost. As a rate, our premiums get to increase. And then, of course, if you ever get into an accident and, you know, there's people get sick or hurt, well, then guess what? Because medical increases went up by 9.7% and even higher today. So of course, those prices get passed on to us in the form of higher premiums. Other items that have increased the prices of insurance premiums, supply chain disruptions, labor shortages. This is something that we really have taken for granted over the years, just thinking that everybody's just going to want to have a job, changing and driving habits, in fact. And so yes, all of the auto insurance policies have been affected. Some things that you can do, review your current policy, shop for a new carrier, just kind of like if your current company is not treating you right and you need more money, you may have to go shop for a new carrier, right? Same thing. If you need to save money, go shop for a carrier. And so now we're just going to go and talk about how life insurance is being affected as well by inflation. So for those who do have term policies, then you already know that your policy is locked in for the length of that term. So for instance, if you had a 30 year policy, whatever rate you purchase on day one is still going to be that same rate 30 years later, which is awesome. I recommend everybody do that today. As you have seen, inflation is going through the roof. So if you had a chance to purchase a live policy at $50 and now it's 100, you're probably going to be like, man, I wish I would have, I was able to purchase it at $50 right per month. Um, so definitely do that. Now how is it affecting folks with term policies? Well, let's just say you had a term policy for 20 years. You bought that 20 years ago is coming up for renewal now. Well, yes, there's higher costs now involved because inflation is higher. Or let's just say that you already had a policy and affect a million dollar one. Okay. And you passed away today and the insurance carrier of course will send your beneficiaries a million dollar check. Well, 20 years later, right today, that million dollars is not worth a million dollars, right? Maybe it's worth about 900,000. You know, um, so if you were expecting your insurance to have one million and now it's only worth 900,000, there is a $100,000 shortfall. So something that you can always do is talk to your insurance agent or broker about increasing your debt benefits to meet, you know, the cost of inflation or you can actually even purchase an inflation rider. So that way you can hedge against the inflation. They do have 3%. I've seen as high as 5% inflation riders. Now of course those riders are going to cost you a little bit more per month, but it will give you reassurance that your loved ones will be taken care of how you would like. It's been a pleasure talking with you today. Definitely check out my other video about the rising costs and inflation. I look forward to delivering more news for you all next week. Until then, have a good day. Here at AI Mutual, we absolutely love coffee. You know what time it is. Time for this week's Coffee Shop Spotlight. Today we are on site at Cafe Brazil Bishop Arts in Dallas, Texas. So anyone who knows me knows I absolutely love Bishop Arts. It's so amazing. They have excellent shopping, outdoor entertainment. I've met a lot of friends that way. They have a variety of restaurants and more. The vibe there is always great, very eclectic. You will definitely leave feeling happy. I love that, right? Everybody's just always so happy when you go there. You can speak to people. They'll say hello to you. Everyone's very friendly at the shops. So today I actually stopped at Cafe Brazil. They do have a location here in Bishop Arts, then another location close to SMU, which is a university here in Dallas. And so I definitely wanted to do that for coverage over coffee. I mean, look at the picture, right? Plenty of coffee selections here, a bottomless coffee bar, late night dining, and free Wi-Fi. So look at this assortment that they have here. Fringe vanilla. They have Colombian dark roast, which I personally love. They have bourbon, pecan, coffee as well, waffles and bacon for our bacon lovers. So, you know, something for everyone. So normally when I go, I always like to get either the veggie omelette or Texas feast that always order off the breakfast menu. I don't ever do their lunch or dinner, so not really sure how the food is there. But their rosemary potatoes are very tasty. But I have to tell you about my poor experience. So normally I've been going to this place since like in my 20s, right? I've always had a great time. So I really thought this would be the same as you have seen in the photos. There was like no one there. Just like one group that was leaving at this table. So I literally was the only person in the cafe. The lady who saw me just looked at me and just she left somewhere. I don't know where she left to. And so, you know, I'm just doing my thing, setting everything up for my coverage over coffee session, looking over the menu, just to see like what I always order. And I had to actually get up to try to find her. So she came out again to watch one of the tables from the group that just left. And so I let her know I was ready to order. You know, I was going to go over to the bar just to take some pictures. I let her know about my coverage over coffee session, but that I wanted to also purchase some coffee and she was just like, OK, she was she just kind of had like this whole dismissive, you know, like I'm interrupting her, you know. And I was like, OK, well, I guess she's going to come back and visit with me. And so I literally sat there, I promise you, for like 15 minutes. And the only reason I sat there that long is because I brought, you know, my laptop with me, I had my my my AI mutual poster with me. I had some things with me. So it's like, oh, now I'm going to have to pack up, you know. And so I just left it there for a minute, took some more photos for my coverage over coffee session. And she saw me and just never, you know, talked to me ever again. So very disappointed in that experience, not really sure what was up with that day. I'm only giving them a one star because the restaurant was clean and I'm really big on clean environments. So I will give them that. Otherwise, I would have gave them a zero. Just be honest with you because the customer was not there. So I definitely, you know, was suggested normally because it's a great place to have a conversation over coffee and enjoy Wi-Fi if you needed a study or do your business. So if you do decide to go, I hope you receive excellent service. But unfortunately, this is my first poor review from my coverage over coffee podcast. Womp, womp, womp.