Over the last couple of years, a lot of things have gone up in price, but we buy them so often we’ve forgotten what they used to cost. Our bank balances tell us we’re spending more overall, but (except for eggs) there’s usually no one thing that stands out as going up the most. Then you get an insurance renewal. It’s likely an annual policy so the price changes once a year. If you’ve got a $2,500 home and auto policy, and it goes up 10%, that’s $250. Hard not to notice that. Factors such as your insurance score, driving record, claims record, and where you live are being outweighed by a market-wide price increase that will impact everyone in some way. This time, the price increases aren’t about you so much — they’re about an insurance marketplace that’s experiencing unexpected claims frequency and severity. On a national level, auto premiums are going up around 10%.
What’s causing this? Growth in number and severity of claims. Despite the prevalence of the “work at home” model, we’re driving more, speeding more, and driving under the influence more. Also, bad weather has damaged a LOT of autos! Throw in some record-setting inflation and the insurance company’s promise to repair or replace has become much more expensive to deliver on.
Another reason you’ll be paying more for auto insurance is connected to the State of Michigan’s $400 refund per vehicle from the Michigan Catastrophic Claims Association (MCCA) Fund a while back. The refund is proving to be more generous than intended and the state needs some of that money back now.
What can you do about all this? Don’t take your price increase personally. You’ve still got your insurance agent who is there for you! If you want to re-visit your coverage or deductibles and make some changes to lower your insurance costs, contact your insurance agent and talk it through with them. If you have an independent insurance agent, they can shop the insurance marketplace to make sure you’re with the insurance company that’s the best at providing the coverage you need at a competitive price. This is a good time for a good conversation!