You may have noticed that your homeowners’ and auto insurance premiums have been increasing recently. There are a few causes for these increases.
Those include:
- More accidents
- Higher medical costs
- Auto theft
- Inflation and rising repair/replacement costs
- Increase in claims frequency and severity
- Changes in your personal risk profile
Let’s dive deeper into these causes and explore some ways to offset your premium increases.
Why Auto Insurance Rates Are Rising:
- More accidents: Distracted driving has surged — cell phones and texting are major contributors.
- Higher medical costs: Increasing repair and medical expenses continue to drive up premiums.
- Auto theft: Nearly 500,000 vehicles were reported stolen nationwide in the first half of 2023.
Inflation and Rising Repair/ Replacement Costs
As with everything else in the world, the costs of repairs and replacements are also on the rise. But why does that affect your insurance premiums? The rising costs of materials and labor, whether it’s lumber, roofing shingles, plumbing components, or auto parts, the price of these essential items has surged in recent years. Skilled labor shortages have driven up service costs, making repairs and replacements more expensive.
This means the average cost to settle a claim—whether for a damaged vehicle or a home repair—has increased substantially. To keep pace with these higher payouts, insurance companies must adjust premiums accordingly. Even if you haven’t filed a claim, the overall rise in repair and replacement costs affects all policyholders.
The Increase of Claims Frequency and Severity
With the increase in severe weather events and people submitting more claims, everyone’s premiums are increasing. You may be thinking, but I haven’t submitted any claims so why is it affecting me too? Severe weather events such as hurricanes, wildfires, hailstorms, floods, and wind damage have become more common and more destructive. As a result, insurers are paying out larger amounts in claims than in the past. Non-weather-related losses, such as auto accidents, theft, and water damage in homes, are also increasing in number and cost.
Changes in your Personal Risk Profile
Changes in your personal risk profile can cause your home and auto insurance premiums to increase. Insurance companies regularly reassess the level of risk associated with each policyholder. If new information suggests you represent a higher potential for claims, your rates may rise. A few examples of this would be: claims history, traffic violations or accidents, changes to your property (installing a pool or trampoline, major house renovations), changes in vehicles or usage, lapses in coverage, etc.
How to Reduce Your Auto Insurance Premiums:
- Increase your deductible
- Lower your annual mileage
- Take a defensive driving course
How to Reduce Your Homeowners Insurance Premiums:
- Raise your deductible
- Look for discounts: Many insurers offer savings for security features such as smoke detectors, burglar alarms, and fire alarm systems.
- Upgrade systems: Modernizing your plumbing or electrical systems can also qualify for discounts.
- Improve home resilience: Installing a new roof, storm shutters, wind-rated garage doors, or wind-resistant windows may make you eligible for additional premium reductions.
What are Some Other Ways to Offset These Increases?
- Enroll in a driving monitoring program
- Bundle your policies
- Maintain a clean claims record
- Sign up for an AAA membership
- Using AAA for roadside help instead of your insurer keeps those incidents off your claims record and helps prevent premium increases.
- Call your insurance agent for a complimentary review of your current coverage
The Viti Companies, an independent insurance agency, is right around the corner for your personal insurance needs. Please call us for a complimentary insurance review at (847) 432-1000 or email us at info@viticompanies.com.
