October 12, 2023

What’s Driving Up The Cost Of Auto and Home Insurance Premiums?

It’s a growing concern. The cost of home and auto insurance premiums is on the rise as global events, such as conflicts overseas and climate-driven catastrophes, are weighing heavily on the nation’s insurance markets. Consumers across the United States are being hit where it hurts – their wallets. So, what are the prominent factors driving up the cost of your home and auto insurance premiums? Let’s take a closer look.

Severe Weather

It’s no secret. An increased number of natural disasters is having a direct impact on insurance costs. In fact, new data shows a quarter of all homes in the United States may be at risk of climate-induced insurance shock. That’s according to the First Street Foundation, a nonprofit research company that specializes in climate risk. For car owners, losses due to storms and floods are also impacting the price you pay for your auto premium. Experts say adjusting to the dramatic increase in severe weather may not only drive up the cost of premiums but may also push insurers out of the market entirely.

Labor shortages, Supply Chain Issues, and Cost of Materials

COVID-19 has changed the world as we know it. The global pandemic impacted labor availability, and we’re still feeling the pinch today. Labor shortages, combined with global supply chain delays, have set the stage for rising costs on both fronts. Whether you’ve hired a contractor for a home renovation project or walked into an auto parts store for the tools you need to make repairs on your car, labor shortages, supply chain issues, and the rising cost of materials are directly impacting the price you’ll pay to get the job done.

Additional Factors Impacting Auto Premiums:

  • Rising New and Used Car Prices
  • Average Car Insurance Claim Increases
  • Number of Fatal Car Crashes
  • Labor Wage Increases

Additional Factors Impacting Homeowners Premiums:

  • Rising Home Replacement Costs
    • This is not your home’s market value.
    • It is your home insurance coverage limit based on the estimated cost to rebuild your home: the cost to repair, rebuild, or replace what you had before, using materials of similar type and quality.*
  • Rising Water Damage Claims
  • Rising Labor Costs
  • Labor Shortages

Need help deciding on the right policy for your home and auto insurance needs? We encourage you to speak with the experts at BayCoast Insurance. We’ll take the time to listen and offer the helpful guidance you deserve. 

*Source: Travelers Insurance

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