Why Is My Insurance Going Up?
One of the questions that we get asked most frequently is about the price of insurance. Since we are an independent insurance agency, we are able to shop our clients' insurance needs to multiple carriers to find the best price and coverage. Still, many individuals with perfect driving records are watching their insurance premiums slowly increase. Why is this?
There are a few reasons your premiums may be going up, even if you have a perfect driving record.
Average claim increase: Your insurance premium is essentially put into a pot and is paid out when claims happen. If the same number of claims are reported but the average cost of those claims are going up, this will raise insurance premiums so that the company can ensure they can meet their obligations
Car prices: Have you seen the cost of new vehicles lately? It is crazy! Even the cost of used vehicles has dramatically gone up. The $30K Ford F-150 that was totaled back in 2015, is now (at least) a $40K vehicle. That extra $10K is passed on to the consumer in the form of higher premiums when that vehicle is totaled in an accident.
Weather events: When bad storms hit an unsuspecting area, this increases the number of claims that must be paid. This in turn increases insurance premiums. When Hurricane Katrina hit New Orleans there were between 300K and 350K vehicles that were declared total losses. This expense was passed on to everyone else. For a more recent example, there were 18 weather-related disasters in 2021 with losses of over $1 billion. Yikes!
Labor problems: Have you heard about this thing called the labor shortage? It’s everywhere! The labor shortage is impacting everyone from baristas at Starbucks to technicians in auto body shops. In order to keep up with demand, companies are paying significantly more money to attract talent and in some cases offering signing bonuses. You guessed it, these expenses are passed on to insurance companies which are passed on to the consumer.
These four reasons are not an excuse to pay too much for your insurance. If anything, this is another advantage of working with an independent insurance agency like Roland, Abbott & DeZoort. If one carrier drastically increases their rates, we have other options. Give us a call and see what we can do for you.