Why Are My Insurance Premiums Going Up?
Q: I'm struggling to stick to my budget as prices keep climbing, and I've just learned that my auto and homeowner's insurance premiums are going up. Why are my premiums rising?
A: Keeping your finances intact in today's inflationary economy isn't easy, and rising insurance premiums will only make it more challenging. Let's take a look at the causes behind rising premiums and whether there is anything you can do about it to make your finances more manageable.
Why are auto insurance premiums rising?
Auto insurance premiums generally rise after the driver files a claim, was in an accident or was issued a traffic violation. They can also increase if there is a rise of claims in your area.
However, even if none of these factors hold true for you, your rates may still be rising now.
According to Progressive, a leading auto insurance provider, the main factor behind rising premiums is an industry-wide labor shortage. The shortage of workers in the auto industry triggered supply chain disruptions and higher labor costs. These drove a 6.3% increase in vehicle repairs and maintenance, as well as a 41.2% jump in used vehicle prices. Rising repair costs get passed on to insurers, who are forced to raise their premiums to continue turning a profit.
In addition, major weather events that cause mass amounts of vehicle damage tend to drive up premiums for all drivers in that area. According to the National Centers for Environmental Information, 2023 has already seen nine major weather events, including floods, wildfires and more. Affected areas become costly for the insurer to cover. To meet the anticipated demand of future events, the insurance company will raise the rates of all drivers in the affected area.
Why are home insurance premiums rising?
Home insurance premiums are also going up, and it's due to multiple factors.
One aspect driving the spike is climate change and major weather events. States with a high occurrence of wildfires, coastal flooding, hurricanes, tornadoes and such tend to have higher insurance premiums. And yet, in recent years, there's been a mass movement out of cities and into states with extreme weather conditions. In 2022, Florida and Texas saw the highest population gains across the country, with Florida welcoming 318,000 new residents and Texas seeing 230,000. Not surprisingly, home insurance premiums have spiked in both states.
Another factor driving up rates is industry-wide conditions similar to those in the auto sector. The home construction industry is facing labor shortages and a steep increase in the cost of materials, such as lumber and wood products, as well as asphalt roofing. This increases the prices on home repairs and makes it more expensive for insurers to provide adequate protection in case of damage. The end result is a jump in premiums, which allows the insurer to stay in business, but of course, hurts the homeowner most.
Is there anything to do about rising insurance premiums?
Rising rates stressing you out? No worries; there are steps you can take to bring down the costs.
First, make sure you are making use of every available insurance discount from your provider. For example, you may want to bundle several policies together or sign up for automated payments to save on your premiums. Also, review your policy and shop around for competing quotes. If you receive a quote that is lower than your existing premium, consider switching providers. You can also call your current provider and ask them to match this quote.
If you're still looking for ways to save, we can help!
You can potentially save hundreds of dollars on your auto insurance premiums by switching to the TruStage®Auto Insurance Program, available to Rio Grande Credit Union members. TruStage offers robust protection, a mobile app for easy claims and friendly 24/7 service. Find out more on our website, and start saving today!
Save on your home insurance premiums, too, by switching to the TruStage® Home Insurance Program, which is also available to Rio Grande Credit Union members. TruStage offers generous protection at affordable rates, covering damage or loss due to fire, weather, theft and more. It also protects homeowners from liability of accidents that occur on their property. You can potentially save hundreds of dollars on your home insurance premiums by making the switch - check out our website today!
Insurance premiums are on the rise, but you can save by using discounts, or switching to a new provider, like TruStage. You don't have to blow your budget on inflated premiums!