Understanding Why Premiums Are Increasing: What You Need to Know
Brenda Heulitt
If you’ve noticed your insurance premiums rising, you're not alone. Insurance rates are climbing, and many factors contribute to this trend. At Brenda Heulitt Agency, we want to help you understand why this is happening so you can make informed decisions about your coverage. Here are the key reasons behind the increased premiums:
1. More Extreme Weather Events
In 2023 alone, the U.S. experienced 28 weather-related events that caused over $1 billion in damages each. This is part of an ongoing trend of more frequent and severe natural disasters, including hurricanes, floods, and tornadoes. These events lead to massive insurance claims, pushing up costs for insurers—and for policyholders like you.
2. Rising Costs of Fire-Related Damages
In 2022, there were approximately 380,000 fires in the U.S., resulting in over $11 billion in damages. Fire-related losses, whether from wildfires or residential incidents, are significant factors driving up premiums, particularly for homeowners.
3. Increased Water Damage Claims
From 2018 to 2022, 1 in 60 homes experienced water loss. Water damage, whether due to leaks, burst pipes, or floods, continues to be one of the most common and costly home insurance claims, further contributing to premium increases.
4. Rising Labor and Supply Costs
Over the past five years, labor and construction costs have increased by 40-50%. This spike affects how much insurers must pay to repair homes, cars, and other property after a claim, pushing premiums higher.
5. Increased Vehicle Accident Severity
Cars are getting heavier—on average, vehicles now weigh about 1,000 pounds more than they did a decade ago. Physics tells us that heavier vehicles cause more damage in accidents, resulting in more expensive claims. Additionally, many modern vehicles come with 150-200% more horsepower than previous models, leading to higher speeds and more severe accidents.
6. The Cost of Technology in Vehicles
Modern vehicles are equipped with advanced technology, from lane assist to automated braking systems. While these features enhance safety, they also make repairs more expensive. This technology, along with supply chain issues, has driven up the cost of claims, affecting auto insurance premiums.
7. TikTok-Thefts and Increased Risk
New trends, such as car theft techniques shared on social media platforms like TikTok, are increasing the risk of vehicle theft. This surge in theft claims is yet another factor pushing auto premiums upward.
8. Legal Costs and Large Settlements
Rising accident settlements and the increasing influence of litigation funding are driving legal costs higher. Some lawsuits result in “nuclear verdicts,” where damages awarded far exceed typical expectations. This environment increases liability for insurers and drives up premiums for everyone.
9. Labor and Supply Chain Challenges
The lingering effects of the pandemic, combined with labor shortages and supply chain disruptions, mean repairs and claims take longer and cost more. Whether it’s home repairs or vehicle parts, the delays and cost spikes are affecting insurance prices.
What Can You Do?
The best way to ensure you're getting the right coverage at a competitive rate is to stay informed and review your policy regularly. At Brenda Heulitt Agency, we’re here to help you navigate these changes. Schedule a consultation
with us today to discuss your options and make sure you’re fully protected without overpaying for your coverage.