We’ve made it through some of the most turbulent financial times in recent history. Give yourself credit for staying on course and taking care of your home, your car, your personal well-being and that of your family.
The insurance world, like so many other industries, has been buffeted by natural disasters, post-COVID economic recovery and other financial pressures. As we continue to realign ourselves, economically speaking, we’re all paying the price.
Unfortunately, increasing insurance policy payments have joined the ranks of groceries, gas, clothing and other items as the day-to-day cost of living has continued to go up. But ensuring that you stay insured continues to be a wise financial decision.
To make sure your insurance is keeping up with the times and you are sufficiently covered, speak to a AAA insurance agent.
How Did We Get Here?
Inflation is the No. 1 culprit. “U.S. insurers have paid more than their counterparts worldwide to repair and rebuild damaged properties and vehicles due to inflation since 2018,” according to the Insurance Information Institute. The group also reported that the U.S. “saw the highest cumulative inflation rate increase for insurance replacement costs (30.4%) between 2018 and 2022.”
When it comes to calculating homeowners policy rates, insurers examine what the cost would be to rebuild the structure where it is located and the state of the real estate market in that community. They also consider the cost of lumber, labor, the supply chain and other variables, as well as the likelihood of storms and natural disasters impacting that region.
“Homeowners can expect to see their premiums increase by an average of 7.1% in 2023,” according to S&P Global Market Intelligence and ValuePenguin, following an upward trend for more than five years, which has increased by a cumulative 19.1% since 2018.
Industry experts predict further increases are on the horizon.
Auto insurance rates have also gone up, rising to match the growing number of drivers, and thus, accidents on the road, as well as to meet the expense of car repairs. Consumers spend an average of $548 on car repairs, according to the most recent data from Kelley Blue Book and Cox Automotive. Part of the reasoning is that new car parts are pricier than ever, and older cars are harder to fix.
Other items that come into play when auto policies are written include the type of car or truck being insured, the driver’s driving history and the state of the vehicle being insured.
These are challenging days for private insurers. And while the cost to stay insured is higher for customers, it’s even more important to have that coverage.
“A good insurance policy can mean the difference between security and disaster,” said Jodi DeSantis, managing director, insurance sales and operations at AAA Northeast.
Coping With the New Normal
What can you continue to protect your home and car?
“Become an educated consumer,” advises DeSantis. “In these uncertain economic times, it’s important for consumers to understand their policies and what they cover. Keep your agent up to date on any changes impacting your home or auto,” she said. “Auto and home insurance is not a luxury, but it is a very important part of your financial plan.”
Patrick Sullivan, managing director of insurance sales, emphasized the same message. “Being wisely insured contributes to your present and future financial well-being.”
Be an Educated Insurance Consumer
As the insurance industry copes with the volatile forces in our world today and premiums continue to rise, some firms are cutting back. Consumers may find that purchasing new policies may be more difficult than in the past.
Reach out to an AAA insurance agent to discuss your current policies and needs. It’s a free service for members.
Here are five more tips to ensure you remain insured:
• Make your insurance payments on time and be aware of your renewal dates.
• Improve your credit score.
• Adjust your homeowners policy and auto coverage.
• Choose a top-rated insurer such as AAA.
• Be an educated insurance consumer and stay up to date on changes impacting insurance in your state.
Learn more about protecting your car, your home and your future with AAA Insurance.