Why Are My Insurance Rates Going Up?

In our entire insurance career, we have never seen what is currently transpiring within the insurance industry and we feel a duty to provide this update on this unprecedented state of our industry.  This is not just something that will impact you and it is not just one insurance company.  The insurance industry is hemorrhaging money, and the rate need will impact all insurance consumers.  These impacts are regardless of driving record, claim severity or the typical factors that have traditionally impacted rates. What we are seeing across the board is significant rate increases and it is happening with all carriers.

WHY?

• Inflation – In the last 3.5 years (2020 – 2023 YTD) inflation has increased by an accumulative 18.11%
  • The average purchase of $100 in 2020, today would cost $118

• Catastrophic Weather Events The last 3 years have had the most billion-dollar weather disasters in recorded history.
  • 2020  22 separate billion+ storms
  • 2021  20 separate billion+ storms
  • 2022  18 separate billion+ storms
  • 2023  15 billion+ storms as of August 8^th

• Auto Repair Costs – Auto repair costs have gone up by 20% in a single year (4x the rate of inflation)
  • While cars are safer, the technology in them is expensive. What once was a simple bumper repair now includes sensors and cameras
  • Increases in wages have caused inflation to outpace average inflation.

• Auto Claim Trends
  • Severity  Total accidents divided by total dollars paid is up 35% since 2020. This means the average auto claim (includes cost of bodily injury) is up 35%
  • Frequency  Total number of accidents divided by cars insured also continues to increase.

• Home Repair Costs
  • Building materials are up 19% since 2020.
  • Construction cost inflation of 12.7% in 2022 alone
  • Labor shortages have extended the time people are out of their home putting pressure on loss of use.

What can You Control?

Using your insurance policies wisely is the most lasting way to control insurance costs. Insurance is best to use in the event of a catastrophe NOT for maintenance and small losses as you will pay for it. You can expect to see an increase of 9-20% PER claim and this increase haunts you for at least 3 and as many as 5 years.

Things you can do now or at your next renewal to help offset these unprecedented rate increase:

1. Raise your deductible: By increasing your deductible—the amount you pay out of pocket when filing a claim—you may be able to reduce your monthly premiums. This would mean you’d pay more when filing a claim, though, so it’s important to balance this with your budget.
2. Bundling policies:Carriers give discounts when they write multiple policies (e.g. home, auto, umbrella, toys).
3. Telematics:Auto insurance offers instant discounts for telematics participation.  It enables the carrier to accurately assess your driving habits. Most drivers see discounts and good drivers enjoy deep discounts. It also helps monitor youthful drivers and the discounts can be significant.
4. Payment and Billing: Most carriers provide a discount for paying your policy in full or if paying in installments, setting them up for auto draft. Most carriers also offer discounts for agreeing to paperless billing.
5. Modifying coverage:You can adjust coverage limits within different sections of your homeowner’s insurance such as liability, personal property, other structures, and loss of use.  Pay attention to these values.  Reducing these limits would reduce costs but be sure not to reduce under what is needed in the event of a total loss.
6. Improving credit:In many states, insurance companies use a credit-based insurance score to help decide your policy cost, so better credit typically equates to lower insurance costs.

It is also important to know that one of the most significant discounts is how long you have been with your prior carrier and what your auto limits are.  To maximize this discount, carriers are looking for auto bodily injury limits of $100,000/$300,000 or higher and with continuous insurance coverage with the same company for three years.  Annual shopping and changing companies could in fact cost you over the long run.