If you haven't had a rate increase on your home, auto, or other insurance yet, it's likely that you'll see one soon. But what is the real cause of rate increases? There are several reasons that costs are on the rise, and many of them can be traced back to inflation, supply chain issues, and a tight job market. In this blog, we'll walk you through the factors causing insurance premiums to rise, as well as a few things you can do to manage your insurance amidst inflation.
1. Prices on car parts and building materials are up.
Whether you get into a car accident or your home is damaged in a winter storm, your insurance coverage will help you make repairs. However, supply chain and labor challenges continue to impact the availability of car parts and building materials. As a result, the supplies necessary to make home or car repairs are more expensive.
2. There aren't enough auto technicians and construction workers.
Similarly, there are fewer repair technicians and contractors available to make repairs. In fact, experts predict there will be as many as 642,000 unfilled technician jobs by 2024. The construction industry isn't faring any better. Surveys show that 93% of construction firms have open positions.
Many auto technicians and construction workers have left the industry. Meanwhile, fewer people are entering the career path. With fewer workers available to make repairs, labor costs have also increased.
3. Claims are happening more often.
As repair costs increase, claims are also happening more frequently. With many workers back in the office, more people are on the road, meaning accidents are more likely. Severe weather events are also happening more often, causing property claims to increase as well. Plus, the damage is increasingly severe. In order to keep up with the increase in insurance claims, carriers must increase their rates.
4. The cost of medical care is on the rise.
Healthcare might not be the first thing that comes to mind when you see an increase in your car insurance premiums. However, the cost of medical care directly impacts your insurance rates. As the cost of medical care increases, so do your premiums.
5. The cost to rebuild or repair property has increased.
With prices for building materials, car parts, and labor all on the rise, the overall cost to repair a car or rebuild a home has skyrocketed. That increased cost means insurance carriers are paying out more in claims. Ultimately this impacts your insurance rates.
Are you underinsured?
Rising insurance premiums impact more than just your budget. Although your rate may increase, your coverage might not keep pace. Some insurance carriers automatically increase your property limits to keep track with inflation, but these increases aren't always enough. Plus, you may have made updates to your home, farm, or commercial buildings that you haven't yet communicated with your insurance agent. Talk to an insurance agent to make sure you have the right amount of coverage.
Find the best coverage for your budget
Connect with a Keller-Brown Insurance Services agent to explore your options. There are a few ways we can help you manage premium increases. Give us a call, so we can:
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Discuss payment options.
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Explore multi-policy and other discount options.
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Review your policies to ensure they still reflect your lifestyle and assets - we might be able to remove coverages that no longer meet your needs.
We can review your coverage to see if it's time to increase your limits, update your deductible, or leverage discount options. As independent insurance agents, we have access to plans you won't find on your own.