“Why does it cost more to insure my vehicle and home every year? I did not get into an accident, receive any tickets, or make changes to my policy!”
This is, arguably, the most common question we, at Woop, field from the policyholders we service.
According to Zebra, rates have a nasty habit of rising each year regardless of whether you filed any claims. Why? Well, carriers compensate for the money they pay out in claims through rate increases. If the amount a carrier pays out in claims exceeds its revenue from premiums, they’ll pass on those costs to consumers the following year. In fact, on average, rates increased by approximately 2% between 2018 and 2019 alone.
The chart below shows how much rates for auto insurance have increased every year since 2011:
Shown differently:
Broken down by region:
Although it might seem unfair to experience an unwarranted rate increase, it is an unavoidable byproduct of how the insurance industry operates. Carriers need to maintain return-on-investment and minimize risk in order to stay solvent.
There you have it – now you know one of the main reasons why, if not the main reason why, it costs more to insure your vehicle and home every year. If you have any questions, hit us up directly!
