Why your insurance rates may be going up soon

As if rising gas and commodity prices weren’t enough, get ready to add one more thing to your list of rising monthly bills: insurance costs. Home and auto insurance premiums are expected to rise, according to major Texas insurance companies.

Much of that comes down to drivers returning to pre-pandemic driving habits, Axios reporter Asher Price told the Texas Standard. Meanwhile, parts and labor to repair cars are more expensive because of inflation. As for the housing sector, supply constraints and high construction costs are also driving up premiums.

This transcript has been edited slightly for clarity:

Texas Standard: Sounds like insurance companies are trying to prepare Texans for rising premiums. What pressures them?

Usher Price: There are a number of factors that go into it, both on the auto insurance side and the home insurance side. During the pandemic, you will remember that the highways were empty in the first months of the pandemic, the first year of the pandemic. And insurance rates skyrocketed and are now climbing back up as people get back into their cars, get into accidents again and have to take their car in to get it fixed.

Meanwhile, there are all these supply chain issues and labor shortage issues. So your auto mechanic is getting paid more than he used to; parts to repair your side mirror cost more than ever. So all this is added to the insurance claim. This is why insurers say they have to raise your car rates.

What increase can consumers expect?

Insurance rates will rise by at least 9% if you are a customer of Germania Insurance. They put out a bulletin that they could see such a big increase. I think the average auto premium was only about $1,400 in Texas at the start of the pandemic. At the end of last year, it was up to $1,600. So, you’ll see that number jump as well.

Home valuations have soared – is this something insurance companies are trying to cover as well?

yes it is. I mean on the home side you have some of the same issues as the automotive side. I mean, anyone who has tried to buy a new home, of course, that price has gone through the roof. But even if you’re just trying to fix up your home, the cost of lumber remains high. The amount you have to pay, the person who designed your house or the plumber, if you have a home problem you have to file a claim for, all of these things have gone up.

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In the meantime, one more thing I have to say on the automotive side is that there is a big problem with catalytic converter theft. Many listeners have probably either had this happen to them or know someone who has had a catalytic converter stolen from the bottom of their car. So, that drives up premiums on the auto side as well.

Once you start talking about the kind of record levels of inflationary increases that we’re seeing, you can expect it to cascade throughout the economy. Is there anything consumers can do to find better prices?

I’ll say one quick thing, which is that some of this is distinctive to these markets, with distracted driving leading to higher premiums. This is becoming more and more common among Texans. Just on a personal level, you know, try to practice safe driving.

But when it comes to shopping for insurance, the Texas Department of Insurance has a handy tool to try to find where you can compare rates. Also, there are companies like The Zebra and others where you can type in what type of insurance you need online as well and they will spit out different options for you.

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