When you open your home or auto insurance bill, you may wonder why rates keep rising, even though you haven’t filed a claim. It’s frustrating, but there are real reasons behind these increasing costs, and some strategies you can use to save.
The Rising Costs of Home Insurance
- Inflation and Material Costs: As inflation rises, the cost of repairing or rebuilding your home also goes up. Materials like lumber, steel, and even labor have seen significant price hikes in recent years. Insurance companies have to adjust premiums to cover these increasing costs.
- Weather and Natural Disasters: Ohio might not see hurricanes, but severe storms, tornadoes, and flooding are on the rise. More frequent claims related to weather damage drive up premiums across the board, even if your property has been lucky enough to avoid disaster.
- Increased Claims Frequency: Even without major natural disasters, more frequent smaller claims – from things like water damage, wind, or theft – also contribute to higher overall costs for insurers. When insurance companies pay out more, they adjust rates to keep up.
- Home Renovations: Adding square footage or renovating your kitchen might increase the value of your home, but it also increases the cost to insure it. It’s important to notify your insurer when you make upgrades so they can adjust your coverage.
Why Homeowners Are Seeing Higher Deductibles
Many homeowners are also seeing their deductible amounts increase. Why? A deductible is the amount you pay out of pocket before your insurance kicks in. Raising deductibles is one way insurers can manage risk and keep premium increases from being even higher.
Benefits of Moving to a Higher Deductible
- Lower Premiums: Opting for a higher deductible can significantly reduce your monthly or annual premium. The savings can add up, and for many homeowners, this makes sense if they don’t expect to file frequent claims.
- Less Small Claims Filing: A higher deductible discourages filing smaller claims, which can keep your policy in good standing and avoid premium hikes for frequent claim filing.
- Self-Insurance: By setting aside some savings for emergencies, you can comfortably manage a higher deductible while still being protected in the event of major damage.
Factors Driving Up Auto Insurance Costs
- More Expensive Repairs: Like home insurance, auto insurance costs are rising due to inflation and higher vehicle repair costs. Today’s cars come with more advanced technology like cameras, sensors, and safety features. While these help reduce accidents, they make cars more expensive to repair.
- Increased Accidents and Medical Costs: Even with safety improvements, there are still more vehicles on the road, leading to more accidents. Plus, medical care costs are skyrocketing, and insurers are responsible for covering injuries that happen in accidents.
- Vehicle Theft: Certain vehicles are targeted more by thieves, which increases the overall costs insurers have to cover. Even if your car hasn’t been stolen, your rates might go up if the risk of theft in your area has increased.
- Uninsured Drivers: The number of uninsured or underinsured drivers on the road impacts the rates you pay. If you’re in an accident with someone who doesn’t have enough insurance, your insurer has to cover the costs – which drives up premiums for everyone.
How to Save on Your Home and Auto Insurance
While rising costs may seem inevitable, there are ways to manage your insurance premiums:
- Bundle Your Policies: Most insurers offer a discount if you bundle your home and auto insurance policies together. This can save you a substantial amount over time.
- Raise Your Deductibles: As mentioned, increasing your deductible can lower your premiums. Just make sure you have enough savings set aside to cover that higher out-of-pocket cost in case of an emergency.
- Shop Around for Quotes: Insurance companies evaluate risk differently, and rates can vary. Shopping around or working with an independent agent who can compare policies from multiple providers may land you a better deal.
- Improve Home and Vehicle Safety: Installing smoke alarms, burglar alarms, or reinforcing your home’s roof can lead to lower home insurance premiums. For auto insurance, features like anti-theft devices or advanced safety systems can reduce your rates.
- Ask About Discounts: Many insurers offer discounts for things like being claim-free, being a good student, or maintaining a clean driving record. It never hurts to ask!
- Consider Usage-Based Insurance for Your Car: Some insurers offer pay-per-mile insurance or telematics-based policies, where your premium is adjusted based on your driving habits. If you drive less frequently or are a particularly safe driver, this could save you money.
Conclusion
While home and auto insurance costs may be rising, there are strategies you can use to keep your premiums manageable. By understanding why costs are increasing, adjusting your deductibles, and taking advantage of discounts or bundling opportunities, you can make sure you’re getting the best value for your money. Don’t hesitate to reach out to us at Preferred Insurance Center – we’re here to help you navigate these changes and find the coverage that’s right for you.
