Why Are Insurance Premiums on the Rise? What You Need to Know
- Charlotte Burr
- Apr 17
- 3 min read
We all remember the impacts of the COVID-19 pandemic, not just on public health, but also on the economy. While the world has started to return to a sense of normalcy, one thing remains—insurance premiums continue to rise. If you’ve noticed your premiums creeping up, you’re not alone. Keep reading to understand why insurance rates are increasing, and how you can take control of your policy to save money.
What’s Behind the Rising Insurance Rates?
Insurance rates don’t rise without reason. Here are some of the main factors contributing to the increase—and what you can do about it.
Inflation: The Price of Everything Is Going Up
Post-pandemic, inflation is impacting nearly every industry. For auto insurance, rising car prices, costlier vehicle parts, and higher labor costs have all contributed to the price hikes. Homeowners' insurance is also feeling the pinch due to increased building material costs and labor shortages, making repairs and replacements more expensive. To cover these higher expenses, insurers have no choice but to raise rates.
Supply Chain Issues
The global supply chain crisis has made it harder to access many goods, from car parts to construction materials. With demand far exceeding supply, the cost of these hard-to-find materials skyrockets. Whether it's fixing a car or repairing a home, higher costs on these essentials are reflected in your premiums. Supply chain issues don’t look like they’re going away anytime soon, which is why insurers are adjusting their rates to account for the unpredictability of material availability.
Climate Change
Although some are skeptical, climate change is happening and is affecting your premiums, believe it or not. From wildfires and floods to hurricanes and extreme temperatures, weather-related property damage is more common and severe than ever before. Insurers are noticing the increased risks and have adjusted their rates to cover the potential for more frequent and expensive claims.
Note: Other factors that could influence insurance rates include location, age and gender, driving history, and coverage type.
How to Lower Your Insurance Premiums
While premiums are on the rise, there are ways you can keep costs in check. Here’s how:
For Auto Insurance:
Maintain a Clean Driving Record: Avoid accidents, speeding tickets, and other violations to keep your rates down.
Improve Your Credit Score: Insurers often offer better rates to those with higher credit scores.
Take Advantage of Discounts: Bundling your auto insurance with home or renters’ policies, or qualifying for safe-driver discounts, can help reduce your premiums.
For Homeowners’ Insurance:
Review Your Coverage: Make sure you’re not over-insured for certain aspects and consider adjusting coverage for things you may not need.
Increase Your Deductible: A higher deductible typically means lower premiums. Just be sure you can afford the higher out-of-pocket expense in the event of a claim.
Avoid Unnecessary Claims: While it may be tempting to file for minor damage, frequent claims can cause your premiums to increase.
At AZ Insurance Team, we understand that rising premiums can be frustrating, and we're here to help. We’ll work with you to find the right coverage at the best price, exploring all options to lower your costs. Whether you’re looking to adjust your current policy or shop for new coverage, we’re ready to help you navigate the changes.
Independent insurance brokerage located in Tempe, AZ. We offer auto insurance, homeowners insurance, life insurance, renters insurance, commercial insurance…
Disclaimer: Coverage will vary on state, insurance company, and type of policy.
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