Indianapolis – Home and vehicle owners will pay more for insurance in 2022.
The Insurance Information Institute warned home insurance could increase by 4% on average. It means homeowners may end up spending up to $1,398 per year.
“There are several factors driving that,” Mark Friedlander explained. “One is major storm losses across the country. This past year, we had $20 billion catastrophe loss events. Those were tornados, hurricanes, wildfires, floods, etcetera. That’s one of the highest numbers we have ever seen in terms of volume of loss events in one year.”
He said Indiana saw an 11.25% rate hike over five years and a 3% upcharge in 2020.
“Another key driver to homeowner insurance rate changes is dwelling coverage,” Friedlander told CBS4. “That’s the homeowner insurance you have in your policy to replace your home if it is destroyed in a loss like a tornado, like a hurricane, like a wildfire or a structure fire.”
Dwelling coverage, he said, has increased mostly because of the rise in supply costs.
“What happens is the cost of rebuilding a home is more expensive now than it may have been two years ago. So say you bought $200,000 of dwelling coverage when you purchased your homeowner insurance policy several years ago, it may now cost $250,000 to replace it with today’s market value of labor and materials,” Friedlander told CBS4.
Those at the Insurance Information Institute recommend shopping around for coverage and comparing plans annually. They also suggest considering flood insurance, since they are prominent in Indiana and across the Midwest.
“If they’re not told they’re required to have it, they’re not in a FEMA required flood zone, they don’t think they need it. Yet, we see floods happen in areas in parts of the country that never saw significant flooding in the past,” Friedlander went on.
Experts said Hoosiers should get at least three quotes for the same coverage to compare. They can do this on their own and online.
Increase in Auto Insurance Premiums
Data from the National Association of Insurance Commissioners shows drivers could experience an automotive insurance rate increase between 1% and 8%.
Experts had a couple reasons for this, including the drastic changes in people’s driving habits from 2020 to 2021.
“We saw a big drop off in the early days of the pandemic in driving, so the number of claims dropped off with it, but as we return to more normal driving patterns, things started to go up,” said Bob Passmore of the American Property Casualty Insurance Association.
In 2021, law enforcement recorded more impaired driving, speeding and failure to wear a seat belt. It reportedly led to an increase in fatalities and injuries on the road. Data from the National Highway Traffic Safety Administration reported 18.4% more fatal crashes in the first six months of the year compared to the year prior.
As a result, auto insurance claims increased by about 5% on average.
“The number one determinate of how much everyone pays for auto insurance is how much claims cost,” Passmore explained.
He brought up the fact that dealerships, body shops and service centers nationwide are dealing with supply shortages. It means everything from car repairs to car rentals is costing more and also leading to an increase in claim prices.