Why Insurance Rates are Going Up
The insurance industry – like many others – is experiencing the same challenges with rate increases when it comes to policies. Many of you have already noticed these increases but for those of you that haven’t, you can expect some changes when you renew. Regardless of your provider, rate hikes are a reality. It’s more important than ever to understand what your home and auto policy includes and to shop around with providers to get you the best coverage. If you need help, call us, and we’ll help you understand your options and find the best plan for your needs.
While we have little option but to accept higher prices for goods and services whether it’s at the grocery store or protecting your risk, that doesn’t stop you from wondering why. From our conversations with insurance providers, here are some of the key factors driving the increases.
What’s happening with home insurance rates
- Inflation – we’re spending more for most goods and services than we were a year ago, which is the main driver for rising insurance costs.
- Building materials – inflation is even higher when it comes to many of the materials commonly required for home construction and repair.
- Labor shortages – labor market pressures have driven repair costs up even more with fewer available workers, extending timeframes for getting work done.
- Extreme weather – major destructive weather events are on the rise, leading to more frequent and more expensive claims.
What’s driving auto insurance rates
Pricier technology – the cameras and sensors that help keep us safe cost more to replace if damaged, with some common vehicles now having 30+ pieces of technology not present on older models.
- Vehicle parts – inflation has hit vehicle parts especially hard, with those prices up anywhere from 10-40% this year (2-3% is more typical).
- Repair costs – supply chain issues and labor market pressures have driven up repair costs by as much as 20% since 2020.
- Vehicle prices – prices for used vehicles jumped more than 27% in 2021 and new vehicle prices are up more than 14%.
- Inflation – the consumer price index has risen more than 9% as of July 2022, which means we’re all spending more for the same goods and services.
- Labor shortages – a decline in available auto techs isn’t just a pandemic challenge, with 100,000+ facing retirement in the coming years.
- Rental cars - as a result of many of the items listed above, rental car prices and length of time for the rental is also increasing. Historically repairs that took 2-3 days are now taking 30-45 days.
Find the right partner to help you maximize your policy – give us a call, we’re here to help.