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State of the market: Rising home and auto insurance rates

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In recent years, home and car owners across the United States have been facing an uncomfortable reality: rising insurance rates. This trend, fueled by a complex web of external factors, is reshaping family budgets and financial plans while potentially making it more challenging to maintain affordable coverage. As costs continue to climb, understanding the underlying causes of these increases is crucial. In this article, we’ll explore why home and auto insurance rates are rising and ways you can help mitigate this increase.

Why are car insurance rates going up?

The cost of auto insurance is influenced by several interconnected factors. In recent years, these have included:

  • Vehicle Shortages and Increased Prices. The aftermath of supply chain disruptions during the COVID-19 pandemic has led to a significant reduction in the availability of both new and used vehicles, which has caused prices to soar.
  • Escalating Repair Costs. Like vehicle purchase prices, the cost of car repairs has surged since the pandemic, exacerbated by a global shortage of car parts and a declining number of auto repair technicians.
  • Rising Medical Costs. Although there’s been a slight decline in car accident rates within the past several years, the cost of medical care continues to drive up insurance claims and, consequently, insurance premiums.
  • Increasing Vehicle Theft. The rates of vehicle theft have risen steadily over the past several years, according to the National Insurance Crime Bureau (NICB). This increased risk of theft could bring higher insurance premiums, especially for drivers in states with disproportionately high rates of vehicle theft.

Why are home insurance costs increasing?

Home insurance rates have also seen a significant uptick. These rates have been influenced by various factors, such as:

  • Increased Building Costs. The price of construction materials rose sharply during the COVID-19 pandemic, which led to increased building costs, subsequently affecting homeowners’ insurance rates. While material costs are beginning to return to pre-pandemic levels, the insurance industry is still feeling this impact.
  • Labor Shortages. The construction industry is currently experiencing a deficit of skilled workers. This labor shortage has been causing delays and increasing labor costs, further inflating the overall cost of home construction and repairs. This can translate into more expensive home insurance claims for insurance carriers – and higher premiums for homeowners.
  • Low Housing Inventory. With the recent steep drop in the housing supply and surge in home prices, the insurance industry has needed to adjust premiums upwards to cover the increased cost of home repairs, remodels and replacements.

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Tips to Lower Your Auto and Home Insurance Rates

Understanding these factors is crucial, but knowing how to mitigate their impact on your finances is just as important. Here are some steps you can take to potentially lessen the effects of rising insurance costs on your wallet.

  • Review Your Policies. Regularly discussing your coverage with your broker can help ensure that you have adequate protection without paying for unnecessary extras. This is particularly vital in a dynamic market where property values and replacement costs can fluctuate significantly.
  • Explore Discounts and Savings. Insurers may offer discounts for things like bundling multiple policies, implementing safety features in your home or driving a green car. Make sure to explore potential savings to help offset rising premiums.
  • Stay Informed and Flexible. The insurance market is always evolving. Staying informed and adjusting your coverage as needed can help you manage costs effectively.
  • Work with an Insurance Broker. Insurance brokers can leverage their relationships with multiple insurance carriers to help you navigate through various policy options to secure the best possible rates.

Managing Increasing Insurance Rates

While the current trend of rising home and auto insurance rates can be challenging to deal with, understanding the underlying causes and ways to adjust your coverage can help you manage these increases effectively. If you need help preparing for these market changes or securing home or auto insurance, Higginbotham can help. Get in touch with a member of our team and discover the difference when you have an insurance broker who cares about what matters most to you.

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