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Why will my car and home premiums increase in 2022?



After two years of unchanged and even declining premiums, 2022 will be a different story. Most insurance companies will raise premiums. Let’s face it – NO ONE is happy about this, least of all you. So we wrote this article to help you understand 1) WHY and 2) to offer solutions to help you fight speed bumps. To understand how we got to where we are today, we must start back in 2020 and move forward.

2020 – the beginning of the pandemic

When the pandemic began in 2020 and locks were introduced, many insurance companies responded to the reduction of driving and subsequent reduction of claims costs (less driving equals less chance of accidents) with one of two solutions: reduced charges across the board and / or premium repayment / cash distribution (similar). A discount).

These measures were taken to help customers as they worked their way through the pandemic.

Fast forward to 2022 and the situation today

All insurance companies ̵

1; like most companies – face rising costs for doing business. Keeping a balance between insurance premiums and the cost of doing business is the key to an insurance company’s ability to continue to pay damages.

And a quick review – when customers pay insurance premiums, these premiums are dumped in a “pool” of other customer premiums. These premiums are used to pay damages. As that pool shrinks, premiums to replenish it increase (Ohio law states that an insurance company must keep a minimum amount in “reserve” to pay future claims).

The following are the most important factors that affect insurance companies’ costs of doing business today when they relate to Ohio car insurance and home insurance. And why you can expect increasing premiums. However, this is not ALL bad news – read on for solutions that will help you keep or even lower your premiums.

Car insurance – top 6 reasons to increase premiums

  • INFLATION. The Consumer Price Index (CPI) rose 7.5% for the 12 months ending January 2022. This is the highest increase since February 1982. Yes, 1982! This increase means that we spend 7.5 percent more on goods and services this year than last year.
  • New and used vehicles cost significantly more today than a year ago. From the time period measuring December 2020-December 2021, the CPI for new vehicles increased by 11.8% and used vehicles increased by 37.3%!
  • And speaking of vehicles, the cost of vehicle parts plays a big role in claims payments. For January 2021 – January 2022, the CPI for motor vehicle parts and equipment rose by 12.6%.
  • Now that locks and restrictions are starting to ease, more drivers are back on the road and driving at higher, unsafe speeds (and causing more serious accidents). Erie Insurance conducted a study with 1 in 10 drivers who admitted that they drove at speeds of 20 MPH above the speed limit.
  • And speaking of car accidents, according to estimates from the National Highway Traffic Safety Administration, deaths increased by 12% in the first nine months of 2021. This is the highest amount for the first month of any year since 2006.
  • And finally, vehicle repair costs have increased due to a variety of factors, including technical advances, lack of available parts, and lack of manpower to perform repairs. Everything can also lead to delays, which means that customers stay in rental cars longer (also increases claims costs).

Homeowners Insurance – Top 4 Reasons to Raise Premiums

  • INFLATION. Yep – exactly the same situation as the car insurance described above.
  • Increased costs for building materials and lack of skilled labor. Most homeowners insurance policies in Ohio use compensation costs to determine the amount of coverage on the insurance.
  • Speaking of building materials – feared that demand would decline during the pandemic, timber producers reduced production and reduced inventory. But in one fell swoop, more people decided to renovate their homes than ever before. Lack of supply and high demand turned into super-high timber prices, with a peak of $ 1,500 per thousand feet of board in March 2021 and falling to about $ 900 in December 2021. Compare that to $ 300-400 between 2015-2019.
  • Natural disasters accounted for a higher amount of insured losses. Of the estimated losses of USD 145 billion, approximately USD 85 billion was insured. Compare that to $ 100 billion (with $ 67 billion in insured losses) for 2020 and $ 52 billion (with $ 26 billion in insured losses) in 2019. Tornadoes, hurricanes, unusual weather (like the freeze in Houston) and forest fires all contributed to those losses.

Solutions to help you lower your car and home insurance premiums

  • Is your car and home policy with the same operator? Whenever possible, if you put your car and home insurance with the same operator, you get a discount on several insurances (which can be quite large). And this discount can often apply to BOTH policies (depending on the operator).
  • Consider raising the deductible. A higher deductible can help reduce the premium, especially on your home.
  • Change your payroll. Some operators give a discount if you pay in full. If you choose an EFT (automatic deduction), most operators will NOT charge a installment fee (or charge a low fee). With some operators charging $ 5-7 per installment, it can go fast.
  • Do you have old vehicles on your car insurance and still carry extensive and / or collisions? Maybe it’s time to consider releasing these vehicles only to liability (if possible).
  • Do you now drive less than before the pandemic? Your daily and / or annual mileage may need to be adjusted to a lower amount. This often leads to a lower interest rate.
  • Talk to your insurance agent. Maybe there are discounts available now that did not exist before. Or your situation has changed and the coverage needs to be adjusted. You do not know until you ask.

Do you have questions about increasing your Ohio insurance premiums? Do you need help lowering your costs? Call us at (937) 592-4871 or fill out the form below. Our staff of knowledgeable agents have helped LOTS of people!




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