Your driving record is perfect, and you never filed a claim before, so why is your insurance increasing so much?! If it seems like your insurance premium has increased since your last renewal, you are not alone. Across the US, home and auto rates have been rising, and things don’t seem to be slowing down. Why are premiums increasing so much?! Here is a breakdown of what’s going on:

Surging used vehicle prices
A shortage of new cars has resulted in high demand for used vehicles, increasing their value. Used car and truck prices have risen 16% over the past year and 50% more than before the pandemic. Most companies insure vehicles at replacement cost, this means that companies are paying much more than just a year ago to repair or replace your car (or someone else’s car) after an accident. 

Increasing repair costs
Whether it be the cost of parts on auto or materials on your home, the cost to repair/rebuild is increasing along with inflation. According to the Department of Labor, motor vehicle parts and equipment are up nearly 15 percent across the U.S. from last year, with car maintenance and repair seeing its most significant increase since 1974.

On the home side, the latest Producer Price Index report price of building materials has seen an increase of 4.9% since the beginning of 2022 and a whopping 35% since the start of the pandemic

More losses
A more commonly known reason home and auto premiums increase is the number of claims that have been paid out, and this year is no different.

In 2021 Oregon had 2,202 wildfires, ranking 6 in the nation by the National Interagency Fire Center for most fires. Although fire has been the number one cause of Catastrophe declared, our state has also seen an uptick in Winter weather storm claims. 

Bottom line:
Insurance companies have been affected by inflation just like everyone else. Many companies had to take increases in 2021, and as inflation continues to affect us, we can expect to see a potentially significant rise again in 2022.

What can you do? The increases may be out of our control, but that’s not to say you can’t make changes to offset it. Talk to your local agent and see what things can be done to make your insurance premium more manageable. Maybe you are missing discounts, or you can increase the deductible. Whatever the case is, remember we are all in this together and your agent is there to help the best they can!