Right now insurance costs are going up. Car insurance, home insurance, business insurance, etc. There are a few reasons for it…
Inflation… we are seeing inflation impacting everything. The electric for your home, the cost of groceries, the gas for your vehicles, even the cost of subscriptions like Amazon and Netflix are increasing.
Claims… You buy insurance to cover the cost of a claim or loss. Through the pandemic we have seen a few things impact claims. All of the doctors and nurses that have been working through the pandemic have filed workers compensation insurance claims when they got COVID and were unable to work for a period.
Also, cost of construction is increasing due to past catastrophic claims. Think Isabel, Katrina, Sandy, etc. Many insurance companies are still paying for past losses. Also there is a huge demand for housing right now. Demand for housing means there is a boom in construction which means the cost of materials and labor are up. This means it costs more to repair and rebuild homes than it did before. That means insurance companies are paying more for home claims than they did in the past.
Have you noticed the cost of vehicles is up? This is driven by scarce resources, like chips and metal materials. Scarcity drives demand which in turn increases the value of vehicles. Used vehicle values have also increased and average 20% above prior market value. This all causes increased cost to repair or replace vehicles. Also car claims are taking longer to resolve which means more money in rental vehicles and storage fees.
Profits… Ultimately insurance companies need to generate a profit in order to continue to pay claims and meet reserve requirements. As claims are paid in turn more money must be generated to offset the loss.
So what do you do about it? Do you shop for a better price? Maybe… Do you tough it out? Possibly… If insurance pricing is rising that means if you change insurance policies you may see an increase again down the road. If you don’t change policies now you may see another increase in the future.
If you have concerns about your insurance policies then you should talk to an Insurance Advisor to review your current insurance situation and discuss the options for changing things up.
Keep in mind driving and claims history does impact insurance pricing. In many states credit score is also a factor. If you have a clean driving history and good credit score then you will have a good insurance rate.