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  • Daniel Duckworth

Why is my insurance so expensive this year??

Thanks to an unusual convergence of market trends, ushered

in by the pandemic and followed by other disruptive events,

you may see a bigger change to the cost of your home and auto

insurance than usual when it comes time to renew your policies

this year.

Insurance rates are based on what an insurer thinks it will cost to

make you whole in the event of a loss – whether it’s roof damage

during a windstorm or a vehicle totaled during a traffic accident.

As you’ve likely noticed, pretty much everything costs more

than it did even a few years ago.

What’s driving higher home insurance costs

If you’ve shopped at Home Depot or Lowe’s lately, you’ve

certainly seen that the price tags on building materials have

gotten pretty expensive. Last year, the cost of building materials

rose 4.7%, reflecting a particularly strong uptick in prices on

things like asphalt shingles (16.2%), concrete blocks (18.5%) and

drywall (20.4%).

To make matters worse, the home-building industry is facing

a shortfall of more than 300,000 skilled laborers, which is

driving up construction-related labor costs. Combined with the

high cost of construction materials and historically low housing

inventory, this has been making home claims much more

expensive for insurance companies.

What’s driving higher auto insurance costs

Ongoing supply chain issues are driving a shortage of car parts

and equipment, which were 22.3% more expensive at the end

of 2022 than they were two years earlier. The overall cost of

maintaining and repairing vehicles increased 18.4 % over the

same timeframe – exacerbated by a growing shortage of car

repair technicians.

The same issues depleted the supply of new and used cars

during the COVID-19 pandemic, and inventories have not yet

recovered. As a result, the average price of new cars has risen

20% since 2020, while used car prices have skyrocketed 37%.

Rising medical costs are another key factor. While the number

of injuries and fatalities from car accidents has somewhat

declined from its peak in 2021, the rising cost of medical care

continues to drive higher claims costs. Between 2020 and

2022, the overall cost of medical care in the U.S. increased


Focus on value as you explore ways to save

Keep in mind that savings come in many forms. The value of

the coverage you choose today may save you more in the long

run than the lowest possible premium. Contact us to review

your current coverage. We’ll help you explore opportunities

for discounts that could offset higher rates when it comes

time to renew.

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