Insurance Rates Are Increasing Everywhere

Insurance rates are increasing everywhere; The cost of personal lines of insurance, such as home and auto policies, has increased steadily over the past few years.

 This can be attributed to several different factors. Inflation and increased catastrophic losses from extreme weather events are common denominators across each policy type. Unfortunately, policyholders can expect these trends to continue into 2023.

 

What Are Some Key Factors Driving Up Home Insurance Rates?

Extreme Weather Events and Catastrophes

Hurricanes, floods, droughts, wildfires, and other severe weather events have become more frequent, destructive, and costly. In 2021 alone, the United States sustained twenty weather events with losses exceeding $1 billion each.1  As weather-related damages go up, so does the cost of insurance overall. Insurers typically adjust rates on a state-by-state basis based on actual and anticipated weather-related losses.

 

Inflation

In some states, the price of homeowners insurance has risen faster than inflation. 90% of homeowners saw their annual premium increase by an average of $134 in the past year, according to a report by Policygenius. The percentage of increase varies by state and zip code, however,  Washington State came in second place, with premiums increasing 18.1% on average. 

The price of a homeowners policy is largely determined by the home’s replacement cost, which is how much it takes to rebuild the home from the ground up. As inflation has driven up prices throughout the economy, all of the costs associated with rebuilding—such as building materials and labor—have risen along with them.

Similar Factors Affecting Car Insurance Rates 

According to a report by Insurify, the average cost of auto insurance policies nationwide rose by 9% to $1,177 per year in 2022, and is expected to rise by another 7% in 2023, The same factors driving up home insurance rates are responsible for increasing auto rates. Frequent natural disasters have caused an overall increase in rates, due to insurers compensating for losses. Inflation has also raised the price of goods and services. With the advancement of vehicle technology, cars are becoming more expensive than ever to repair orand replace.

Another reason rates have increased is that more people are driving, leading to increased accidents and higher premiums for everyone.

 

Watch our Ask The Agent Series on YouTube to learn more about home and auto insurance. 

Should you have any questions regarding your current coverage or want further information on these points, Basin Pacific Insurance is here for you. For more information on home insurance coverage offered by Basin Pacific Insurance, click here, or contact us at (509) 765-4785