Home and auto insurance rates are rising—why? What can the average consumer do?

Insurance premiums are on the rise. What caused a larger than usual increase? An unusual convergence of market trends, ushered in by the pandemic and followed by other disruptive events, have led to a bigger change to the cost of your home and auto insurance than usual. This shift will be reflected when it comes time to renew your policies this year. 

Insurance rates are based on what an insurer thinks it will cost to make you whole in the event of a loss—whether it's roof damage from severe weather or a vehicle totaled during a traffic accident. You've likely noticed that pretty much everything costs more than it did, even from a few years ago. 

What's driving higher home insurance costs?

If you've shopped at a home improvement store lately, you may have seen that the price tags on building materials have gotten pretty expensive. Last year, the cost of building materials rose 4.9%, reflecting a particularly strong uptick in prices.¹

Additionally, the home-building industry is facing a shortfall of more than 390,000 skilled laborers, driving up construction-related labor costs.² When you combine these factors with historically low housing inventory, home claims have become much more expensive for insurance companies.

What’s driving higher auto insurance costs?

Ongoing supply chain issues are driving a shortage of car parts and equipment. In fact, over the past two years, parts prices have gone up 20%-30% on average.³ Furthermore, this measure is just an average – some parts have literally doubled in price. The average annual cost of ownership is up more than 13% from last year to more than $12,000.⁴

These are the same issues that depleted the supply of new and used cars during the COVID-19 pandemic, and inventories have not yet recovered. As a result, the average transaction price is 27.8% higher than pre-pandemic prices.⁵

Another factor affecting insurance premiums is the rising cost of medical care. Healthcare services costs typically grow faster than the cost of other goods and services in the economy. The Consumer Price Index (CPI)—the average change in prices paid by urban consumers for various goods and services—has grown at an average of 2.5 percent per year while the CPI for medical care has grown at an average rate of 3.2 percent per year.⁶

Are there still opportunities to save?

Keep in mind that savings come in many forms. The value of the coverage you choose today may save you more in the long run than the lowest possible premium. 

Vantage offers auto and home insurance through our Credit Union Insurance Agency, LLC, (CUIA).^* CUIA can serve as your trusted advisor to design a personalized insurance plan that fits your individual needs and budget.

Explore your insurance options with CUIA!

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¹ Source: Associated Builders and Contractors

² Source: CNBC

³ Source: Automotive Fleet

⁴ Source: The New York Times

⁵ Source: MoneyGeek

⁶ Source: Peter G. Davidson Foundation

^* The Credit Union Insurance Agency, LLC (‘CUIA’) is a wholly owned subsidiary of Members Resource LLC, a Credit Union Service Organization, a wholly owned subsidiary of Vantage Credit Union (‘VCU’). Business conducted with CUIA is separate and distinct from VCU. Insurance products offered by CUIA are (i) not deposits of any financial institution and therefore are not NCUA or otherwise federally insured and (ii) are not an obligation of or guaranteed by VCU. Coverages, discounts, special program rates or savings, billing options, and other features are subject to availability and individual eligibility. Savings are not guaranteed.

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