Why Insurance Cost is on the Rise

Have you noticed an increase in your home and/or auto rates recently? If so, you’re not alone.

But, we get it. Just because it’s happening to a lot of people doesn’t necessarily make you feel better. Let’s dive into the "why" behind these increases, so you can stay in-the-know.

Let’s begin with home insurance.

Accumulated claim history throughout the market plays a role in the increase of home insurance premiums along with severe weather events, labor shortages and the increased cost of building materials. Weather events were anything but quiet in 2023. The National Oceanic and Atmospheric Administration (NOAA) estimates that 28 weather disasters occurred in the U.S. through August 2023 with damage of at least $1 billion each. 

Labor shortages in the construction industry are another factor. Without enough workers, it can take much longer to repair or replace a home, which can contribute to higher claim costs.

So, what about auto insurance?

Like home, claim history also impacts the rise of auto insurance premiums. The cost to settle claims has increased drastically due to supply and labor shortages. The longer it takes for supplies to arrive, the longer insurance companies must pay for the extended waiting period, especially for coverages like Additional Expense, which provides rental car coverage (subject to the applicable limits of rental insurance). All of these factors combined might result in higher premiums.

Continue reading at Auto-Owners Insurance here