Interest Rates and Inflation Can Affect Your Insurance Costs: What You Need to Know


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If your insurance has gone up in price in recent months, you’re not alone. Prices have been rising for auto insurance, homeowner’s insurance and health insurance due to various economic factors. But, there are ways to save on your insurance even as rates rise.

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Here’s what you need to know about insurance premiums.

How Rising Incomes and Rising Interest Rates Affect Insurance Costs

Inflation is making everything more expensive, and insurance companies are passing these higher costs on to consumers.

“Rising rates affect the cost of insurance companies to pay claims, as equipment and services become more expensive,” said Brian Pattillo, vice president at Goosehead Insurance. “The same accident that cost your car $1,500 last year is costing you hundreds this year. A car that was listed years ago might have gotten $8,000, but now that same car is only a few thousand away from replacement.”

“In order to pay claims, insurers have to invest the money they get from claims to cover future claims,” ​​he said. “These fixed costs are now cheaper, so the company has to make more money to pay claims, which are now more expensive. The only way to reduce this gap is to increase payments to consumers. ”

As a result of these additional costs, insurance rates have increased by about 7% for new business and renewals, Pattillo said.

“However, the actual impact of price changes may vary significantly at the state level,” he said. “For example, in the North Texas market, we’re seeing double-digit increases, while Central Texas could see lower numbers. This will be true in every state. by raising prices for consumers.”

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How to Save on Insurance Costs Despite Rising Interest Rates and Rising Fees

“During this time of rising prices, buyers are re-examining every part of their home equity. Just because your rates are going up with your current insurance provider doesn’t mean you can’t find something cheaper — you just need to use all the options in the market,” Pattillo said.

This may mean looking for options from unknown insurance providers.

“Many buyers start with products they are familiar with, but it’s difficult because these companies are often very expensive,” Pattillo said. “With over 400 insurance companies offering home or auto insurance in the US, it’s important to shop around. The best way to do this is to contact an independent agent who can buy it for you. Some independent agents allow consumers to shop online, but be careful, as there are many sites that make you think they are comparing prices, but in reality, they are selling your data.”

What Buyers Should Remember When Buying Insurance

When shopping for insurance, it may be tempting to get the cheapest rate, but this can cost you more in the long run.

“It is very important for consumers to avoid removing essential items, because it can be a financial problem if they are asked,” said Pattillo. “More than 60 percent of consumers receive insurance through platforms known as ‘single carrier’. Examples of this would be companies like State Farm, Farmers or Allstate, where their agents only represent one method. The prices of these companies cannot be resolved, so if you call that save money and you’ve been able to deduct all the benefits you’re entitled to, the only option they have is to lower your repayments. In most cases, the trade-off is not worth it.”

Instead, hire an independent contractor.

“An independent agent can make sure you’re properly covered, then shop around for more coverage to get you a competitive price,” Pattillo said.

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About the Author

Gabrielle joined GOBankingRates in 2017 and brings with her ten years of journalism experience. Before joining the group, he was a writer-reporter for People Magazine and People.com. Her work has also appeared on E! Online, Us Weekly, Patch, Sweety High and Discover Los Angeles, and was featured on “Good Morning America” ​​as a celebrity media expert.