If you’ve watched the news lately then you’ve seen all the talk around inflation. With the feds recently announcing the fourth round in interest rate increases, gas prices consistently being over $4.00 a gallon, and the backlog of inventory it is a lot to take in. The cost of living has hiked exponentially over the past couple of years putting a burden on each of us.
With inflation hitting just about every segment of the economy, insurance is not that much different, though there are some positives to the insurance industry. We’ll get into that later. Right now, as our customers are trying to pinch every penny in order to afford a tank of gas, the question of whether insurance rates will skyrocket like everything else is an everyday question throughout our office.
Will My Homeowners Insurance Policy Increase in 2022?
Long story short—yes. We’ve all seen the conversation around increased construction costs. This has been going on since late 2020, but it wasn’t until this year we saw the trickle down, specifically when it comes to your personal home insurance.
In a normal economy, usually your home’s cost to rebuild is increasing about 2%-3% each year. This covers normal inflation. What we are currently experiencing is not normal inflation. Building material costs have increased 19% in just the past 12 months alone. What does this mean for you? It means that what you had your home insured for last year, may not be adequate this year.
I’ve Never Filed A Claim—Why Will My Personal Insurance Go up?
This is a fair question. If you’ve never filed a claim, but your neighbor down the street has filed two claims, why does it feel like you’re being penalized? Several factors go into calculating a home insurance premium. One of them is whether or not you’ve filed a claim. Others include liabilities or attractive nuisances (swimming pools, trampolines, etc.), neighborhood crime, credit score, age of your roof and your home’s replacement cost to name a few. So even if you haven’t filed a claim, other changes to your property and the neighborhood can have an impact on your insurance premium.
These increases are not just specific to Oklahoma homeowners’ insurance policies. Inflation is happening across all 50 states. While we’re seeing most companies file for rate increases, there are also state and regional specific causes that could make your home state insurance higher than someone in a different state. For Oklahoma and Texas, hails storms and tornados are a huge issue when it comes to already having some of the highest property insurance costs in the whole US. For coastal regions, hurricanes and flooding are a huge factor for their insurance costs.
What Can I Do To Keep My Insurance Costs Down?
Just because inflation is happening doesn’t mean you don’t have options. Here’s a couple of tricks to help this year.
- Shop with an Independent Insurance Agency. While the State Farms, Farmers, and All State only have one company to shop with, Independent Agents have contracts with dozens of carriers. For an example, ECI has over 200 companies depending on your situation to shop your home, auto, and business insurance with.
- Tweak your existing coverages—a knowledgeable agent can help guide you through this.
- Look at deductibles- While this doesn’t make as much of a difference as it previously did, it can help. The key to this is to not take on such a high deductible that if something does happen, it puts you in a financial bind.
Inflation will keep rising but figuring out how to get the best coverage with the most competitive price will continue to be a priority. Get an instant quote for your Oklahoma home, auto, renters, or condo insurance by clicking here or text or call us at 405-373-2977 or email us at firstname.lastname@example.org.
Written by: Avery Moore
Read more Blog posts by Avery Moore