car in driveway of home

You have a perfect driving record. You haven’t filed a claim for any damages to your home. And yet, the amount you pay for auto and home insurance has probably increased over the last year. What gives?

Unfortunately, it’s a frustration many Americans are experiencing right now. In fact, research shows homeowners saw their home insurance bills jump 12.6% last year, and they can expect to see them climb another 7.1% higher in 2023. Meanwhile, auto insurance prices are up 14.5% in the past year.

So while you’re not alone in feeling the pain of increased prices, that’s probably not comforting enough to keep you from worrying about paying more for coverage. 

If you’re looking for ways to help combat higher insurance prices and make sure you have the best coverage for your needs, we’re here to help. Read on to see what you should consider before making any changes to your home or car insurance coverage.

Why am I paying more for insurance?

While most people have come to expect rate increases when they file a claim with their home or car insurer, there are also many other factors that go into the price you pay for insurance coverage, many of which are out of your control. Here are just a handful of examples.

Materials cost more

Supply chain issues from the pandemic translated into skyrocketing costs of building supplies and replacement parts. Furthermore, as our cars and homes become more “smart,” high-tech components are also more expensive to fix and replace if damaged.

Labor costs more

More than 50 million workers quit their jobs in 2022. This means there are staffing shortages across the country, including in construction and auto repair. This has resulted in increased labor costs, meaning it now costs more to pay people to rebuild a home or repair a car. 

Increased weather-related losses

Recently, both State Farm and Allstate announced that they have stopped selling home insurance policies in the state of California, due in part to increasing wildfires. As the risks of more catastrophic weather incidents increase, insurers may stop writing insurance policies for riskier parts of the country, and as a result, consumers will have access to fewer insurance options. Additionally, providers will likely try to raise prices for their current policyholders in order to cover higher claim costs and make up for lost premium.

Poor driving behavior

Ever since COVID-19 restrictions have eased up, more drivers are back on the road. More drivers on the road, along with increased poor-driving behaviors such as distracted driving, increases the risk of accidents.

Social inflation

A lesser known reason for increased insurance prices is due to “social inflation.” In the simplest of terms, social inflation describes the general public’s attitude towards “big businesses” including insurance. Unlike the other examples on this list, social inflation isn’t a result of economic factors. Social inflation instead represents shifting social and cultural attitudes about who is liable in any given insurance case. Based on the current state of social inflation (which is a negative one), people are more likely to file claims against their insurers and are more likely to hire attorneys to handle those claims and take insurance companies to court. Further, juries are more likely to side against insurance companies, awarding larger amounts to plaintiffs than typically happens.

Trickle down effect

Once you consider all of the examples above, it becomes clear that rising costs and increased risks mean insurers are starting to pay more for claims that are happening more often and at a larger scale. In order to combat their increased costs, insurance companies pass down some of those costs to the consumer by way of higher insurance premiums, thus increasing the amount we pay for personal auto and home insurance. 

What should I do to address higher insurance prices?

Your first instinct after receiving a higher bill from your insurance company may be to shop around for a better price. Afterall, it’s easier than ever these days to research options online and compare quotes. Shopping through an insurance marketplace like MyLifeProtected can help you make sure you’re getting the best price on car and home insurance. By providing some basic information to get a quote online, our agents search our extensive list of national and regional insurance companies to help make sure you’re getting the best value for the coverage you want and need.

However, it’s important to remember that it’s not just you experiencing higher rates; it’s happening across the country to insureds of all types. No matter what insurance company you go to, it’s likely the insurance rates offered through different providers are still higher than usual. 

Plus, if you were to leave your current insurance provider for another, you could risk: 

  • losing any “tenure” or loyalty discounts like accident or claim forgiveness
  • penalties for switching companies within a short timeframe
  • cancellation fees from your current provider
  • lapse in coverage (a lender could default your mortgage if you fail to maintain home insurance coverage)
  • rate increases down the line
  • poor customer experience with a new insurer you haven’t worked with before

So, when considering switching insurance companies,  oftentimes the best move might be to not make a move at all.

Instead of switching providers right away, you should check with your current insurance agent to see if your current insurance company offers any incentives to help lower the price you pay. For instance, many insurers will reward you with discounts for bundling your car and home insurance policies with them. 

Many insurance companies also now offer telematics or usage-based insurance programs, which use data to provide more personalized rates based on risk-adverse behaviors both behind the wheel and at home; for instance, the safer a driver you are, the more you save. 

Finally, if you’re in the financial situation to do so, some insurance companies offer discounts for signing up for autopay or for paying your premium in full upfront; the latter can often save you around 12%

Most importantly, by working with a licensed insurance agent, you may be able to find instances to save or improve upon your coverage that’s not always apparent to the average consumer. Some more on that below.

Who can help with my insurance questions?

As with any financial decision, it’s always a good idea to speak with an expert, especially when you’re unsure of what’s best for you. Sometimes policies can be confusing, or maybe you aren’t sure of how much coverage you actually need. Consulting a knowledgeable and licensed insurance agent, especially if they work with multiple insurance companies, is important because they have an inside look into the market and know the differentiators between companies and coverages. 

At MyLifeProtected in particular, our Retention Team is dedicated to helping our policyholders ensure they have the best insurance coverage for their needs. Our team has implemented a “Renewal Readiness Program,” where at least a month before your policy is up for renewal, one of our specialists completes an account review to ensure that the price you pay and the coverage you have is the most competitive in the market. If not, we’ll reach out to you to review and advise you on other options available to you.

The right protection matters

Rising insurance prices are the norm right now; almost everyone seems to be experiencing rate increases no matter where they live or what type of insurance they have. But we know that doesn’t make it any less frustrating. 

The most effective way to make sure you are still getting the best insurance coverage for your needs and at the best price is through the help of an experienced insurance agent who has access to multiple rates and can help you compare coverage options. You may not always be able to lower the price you pay for insurance, but by working with an expert, at least you’ll have the peace of mind knowing you’re properly protected.

Interested in speaking with one of our friendly and knowledgeable agents? Contact us today!

By tsmith