Why home and auto insurance rates are rising in 2022?
You’ve probably already noticed everything costing more than it did just last year. Home & Auto insurance is no different. Thanks to an unusual inflation trend resulting from the pandemic and other disruptive events. Insurance rates are based on an estimated cost to replace what you lost in the event of a claim; regardless of whether it is roof damage or a car being totaled.
What’s driving higher Auto insurance costs?
An ongoing shortage of microchips and other critical parts like wiring harnesses, plastics and glass is making it more costly to repair or replace a vehicle after an accident. Supply chain issues are rapidly depleting inventories of new and used cars. Inventories have reached a critical low-point, falling 87% between 2020 and 2022. As a result, the average price of new cars has risen 14% over the same period, while used car prices have skyrocketed with a 55% increase.
At the same time, accidents have become more frequent and severe, increasing the number and cost of auto claims. In the first six months of 2021, nearly 2.5 million people sustained injuries requiring consultation with a medical professional. Accident fatalities in Jan. 2022 were 14% higher than in Jan. 2020.
What’s driving higher Home insurance costs
If you’ve shopped at Home Depot or Lowe’s lately, you’ve seen the dramatic price increases on building materials. Last year, the cost of building materials rose 14.1%, with lumber playing an outsized role in that trend, more than tripling in price since March 2020.
To make matters worse, the home-building industry is facing a shortfall of at least 200,000 skilled laborers, which is driving up construction-related labor costs. Combined with the high cost of construction materials and historically low housing inventory, this has been making home claims much more expensive.
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Why Parker & Watts?
Parker & Watts has been doing business in Nashville and the Middle Tennessee area since 1979. We are proud to provide Auto, Home, Business, Life and Health (including Medicare) insurance to thousands of people. We are committed to building trustworthy relationships by providing good rates with great coverage. We believe in Excellent Service for all. In a world of automation, we set ourselves apart by giving the personal touch.
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