You have probably noticed that the price of pretty much everything has gone up in the last few years. This includes not only necessities such as housing, food, gas, and energy, but practically all goods. Unfortunately, insurance is not immune to market forces and is seeing rates going up as well, which you will notice when it’s time to renew.
So we at Insurance Professionals of Arizona would like to explain the increase in rates for both homeowners and auto insurance up front, so our clients can understand and budget accordingly.
Reasons behind the rise of homeowners insurance rates
As with almost everything else, the cost of home building materials rose 4.7% in the last year, reflecting a particularly strong uptick in prices on things like asphalt shingles (16.2%), concrete blocks (18.5%) and drywall (20.4%).
In addition, the home-building industry is facing a shortfall of more than 300,000 skilled laborers, which is driving up construction-related labor costs. The combination of sky-high costs for construction materials and historically low housing inventory has been making home claims increasingly more expensive for insurance companies. This, in turn, forces rates to increase to cover those claims.
Reasons for increasing auto insurance rates
The same issues plaguing the construction industry is weighing down the auto industry as well. Supply chain issues that have been prevalent since the COVID-19 pandemic have caused an enormous shortage of necessary auto parts and equipment, the costs of which have jumped over 22% between 2020 and 2022 and have only increased further in 2023. The overall cost of maintaining and repairing vehicles increased 18.4 % over the last two years – exacerbated by a growing shortage of car repair technicians.
Mass disruptions in the supply chain have also led to a shortage of new and used cars, causing inventory to fail to meet consumer demand. As a result, the average price of new cars has risen 20% since 2020, while used car prices have skyrocketed an incredible 37%.
Yet another factor in determining auto insurance rates is the cost of medical care, specifically the cost of paying out claims for medical expenses. While the number of injuries and fatalities from car accidents has somewhat declined from its peak in 2021, the overall cost of medical care in the U.S. increased a whopping 6.8% between 2020 and 2022, representing billions of dollars in new health care costs.
Let IPA help you evaluate your coverage and find savings
Keep in mind that while there is nothing you can do about the coming rate increases for home and auto insurance, there might be things you can do to help mitigate those costs.
We at Insurance Professionals of Arizona prides ourselves on always taking care of our clients, and making sure they always have the coverage they need and that they can afford. If you are concerned about your ability to pay for these rate increases, give us a call. We might be able to review your current coverage to find savings in the long run, as well as possibly find opportunities for discounts that can be very helpful as well.
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