My Homeowners and Personal Auto rates are increasing – What is going on?!

The price of insurance is going up - personal auto is seeing an increase on average 3.1% and homeowners is even higher, averaging 8.4%. What is the extra money covering? Here are some of root causes of these increases:

  • 2021 was the 4th most extreme catastrophic loss year in history
  • Home construction costs had its biggest increase since 2006
  • Cost of residential construction materials has increased almost 19% since the end of 2020
  • Vehicle crash fatalities rate jump 12% in 2021 compared to 2020
  • Cost of medical care increased
  • Cost of vehicle repairs increased
  • This list goes on…

Property and Casualty insurance, which includes homeowners and personal auto insurance, is a promise to make you financially whole* in the event of a covered peril. A replacement cost policy will pay for the cost of rebuilding, repairing, or replacing the damaged property using new materials, and current labor costs to bring the damaged property back to a like quality in the same location as it originally was created. Unfortunately, this means when costs of materials and labor increases, so too must your premium.

Will this trend upwards continue?

Probably – According to American Property Casualty Insurance Association incurred losses and loss adjustments increased 17.8% yet premium increased only 3.1% for auto and 8.4% for homes on average. Plus, there is no indication that costs of materials and services are going to decrease in the future and the weather predictions continue to be volatile.

What if my rates didn’t go up?

You may just be extremely lucky, or a rate increase is heading your way soon. Many carriers plan to implement the increase on renewal business starting in the summer, so if it misses you this year, it’s likely to catch up with you next year.

What can you do about it?

Many insurance carriers are actively looking for ways to keep premiums as low as possible by rewarding behaviors that offset risk or ease the cost of business. Look for discount you can apply such as paid in full, multi-policy, safe driver, anti-theft devices, and telematics. Talk to your independent agent about remarketing your policy to see if you can find a better rate with a new carrier. However, be advised that a lower initial rate will likely increase upon renewal as these increases are industry wide and not company specific.

Recommended Next Steps

It’s a good idea to review your policy as prices to repair or replace your vehicle and home continue to increase you could find yourself under insured, meaning if you experience a complete loss, your limits of liability may not be sufficient to cover the full cost of buying a replacement car or rebuilding your home. As your trusted advisors, we will do what we can to ensure that you’re fully covered in case of a loss. That’s why it’s always recommended to consult with your agent yearly to discuss your current status so we can get the best possible coverage in place for your needs.

 

*up to your limits of liability