You may have noticed your insurance rates are rising or you have been warned that they are about to go up. Both auto and homeowners insurance premiums are on the rise and there are several reasons for these increases.
Rising Inflation
Inflation levels are at the highest the United States has seen in the last forty years. Inflation has a considerable impact on the insurance industry and insurance costs. Your insurance company coverage is influenced by multiple factors including replacement costs and the cost to rebuild when determining rates. Inflation causes the cost of most goods and services to go up, therefore increasing the amount of insurance coverage you would need to repair or rebuild.
Supply Chain Disruptions
Supply chain issues have also impacted the cost to rebuild or repair after a disaster. Materials are less readily available, and therefore, demand and cost is higher. With the cost of building materials up 8 percent over last year, it now costs, on average, $36,000 more to rebuild a home than just a few years ago.
Also a challenge is the significant shortage of skilled workers in the construction industry which is driving up the costs of labor and causing delays to repair or rebuild. The labor market disruptions are not unique to the housing market either. Auto repairs are influenced by the same challenges, and with a shortage of technicians and similar supply chain issues for vehicles (new and used) and their parts, auto insurance rates are on the rise.
An additional concern for the auto industry is the high cost of auto tech. Advancements in various technologies are more expensive to repair which can also drive up your auto rates.
With labor shortages and material costs still plaguing the industries, auto and home insurance rates may continue to rise.
Weather and Natural Disasters
More extreme weather events also impact home insurance premiums. Extreme weather is responsible for 39 percent of all U.S. home insurance claims. In 2021, there were twenty weather events where losses exceeded $1 billion each. Weather-related costs have a substantial impact on insurance carriers reinsurance costs and paid losses and can lead to increased costs for all consumers.
Talk to a Brooks, Todd & McNeil Agent
Contact a Brooks, Todd & McNeil insurance agent today to learn ways you may save money despite rising insurance costs. Our agents can also review your policies and identify any areas where your coverage may be insufficient to cover rising costs to rebuild and repair.