Due to an unusual convergence of market trends, ushered in by the pandemic and followed by other disruptive events, you may see a bigger change to the cost of your home and auto insurance than usual when it comes time to renew your policies this year.
Insurance rates are based on what an insurer thinks it will cost to make you whole in the event of a loss – whether it’s roof damage during a windstorm or a vehicle totaled during a traffic accident. As you’ve likely noticed, pretty much everything costs more than it did a few years ago.
What’s driving higher home insurance costs?
If you’ve shopped at Home Depot or Lowe’s lately, you’ve certainly seen that the price tags on building materials have gotten pretty expensive. Last year, the cost of building materials rose 4.7%, reflecting a particularly strong uptick in prices on things like asphalt shingles (16.2%), concrete blocks (18.5%), and drywall (20.4%).
To make matters worse, the home-building industry is facing a shortfall of more than 300,000 skilled laborers, which is driving up construction related labor costs. Combined with the high cost of construction materials and historically low housing inventory, this has been making home claims much more expensive for insurance companies.
What’s driving higher auto insurance costs?
Ongoing supply chain issues are driving a shortage of car parts and equipment, which were 22.3% more expensive at the end of 2022 than they were two years earlier. The overall cost of maintaining and repairing vehicles increased 18.4% over the same timeframe – exacerbated by a growing shortage of car repair technicians.
The same issues depleted the supply of new and used cars during the COVID-19 pandemic, and inventories have not yet recovered. As a result, the average price of new cars has risen 20% since 2020, while used car prices have skyrocketed 37%.
Rising medical costs are another key factor. While the number of injuries and fatalities from car accidents has somewhat declined from its peak in 2021, the rising cost of medical care continues to drive higher claims costs. Between 2020 and 2022, the overall cost of medical care in the U.S increased 6.8%.
Where do we go from here?
Keep in mind that savings come in many forms. The value of the coverage you choose today may save you more in the long run than the lowest possible premium. But there are certainly discounts available to help combat the higher insurance increase on your renewal.
Below is a list of discounts that could be available to you in order to combat the higher insurance premium.
- Package home and auto
- Bundling the home and auto insurance can save clients up to 15% on premiums.
- Distant student
- Policies that include a teen driver attending a school more than 100 miles away without a car qualify for this discount.
- Good student
- We’ll apply a good student discount when a customer certifies a teen’s good grades (A/B Average)
- New or renovated home discount
- Customers may qualify for special savings if the home was recently built or substantially renovated.
- E-Customer/EFT Auto Pay discounts
- Signing up for paperless billing can save clients up to 5% on overall premiums and signing up for automatically deducted payments can save customers on billing/paper delivery fees, which certainly add up over time!
- Telematics programs
- By downloading an app that allows the insurance company to track your driving habits can save customers up to 10% on their overall premium.
- Protective devices discounts
- Homes with burglar alarms or sprinkler systems installed and are properly maintained receive a discount.
- Accident Forgiveness
- With accident forgiveness, eligible customers can rest assured that their insurance company won’t raise the premium as a result of the first accident.
- Diminishing Deductible
- For eligible customers who maintain a clean driving record, insurance companies reduce the deductible up to $100 annually.
- Accident-free discount
- Drivers earn a discount once they go three years without an accident. Reach five years for an even bigger discount.
As your agent, we have your back! We will do everything in our power to ensure that you are receiving the best insurance price while still having strong coverage.
If you have any questions or concerns regarding your insurance renewals, please give our office a call. One of our insurance experts will gladly discuss you coverage and possible options to help offset the higher insurance premiums!