A variety of circumstances have driven up homeowners insurance premiums in recent years. Here are three to note:
- Climbing materials costs: Between 2020 and 2021, the cost of construction materials rose 18.6%: lumber, 6.2%, and asphalt roofing materials rose 16.4%.
- Weather-related disasters: In 2021, there were 18 weather-related disasters nationwide, with losses totaling over $1B.
- A shortage of skilled labor: According to the U.S. Bureau of Labor Statistics, there were 358,000 job openings in the construction industry in September 2021.
Why Auto Insurance Premiums are Rising
It’s not just homes–auto insurance is being impacted, too. Here’s why auto premiums are on the rise:
- Supply chain issues: Lingering supply chain issues have triggered a shortage of chips and, therefore, the production of new cars.
- Increase in parts costs: In addition to the average car insurance claim being up 20%, individual parts to repair these damaged vehicles are also up 6%.
- Severe accidents on the rise: In the past few years, there’s been an increase in the severity of auto accidents—in fact, the number of fatal car crashes in the first six months of 2021 was up 18.4% compared to the same period in 2020.
- A shortage of skilled labor: Right now, the automotive industry needs three times as many trained technicians as they currently have.
The bottom line for insurance companies? Claims are more prevalent, and payouts are more costly. The bottom line for you? Insurers have been forced to increase their annual premiums to offset their costs which unfortunately shows up in your mailbox come renewal.