Why you may see your insurance rates rising soon

As if the rising cost of gas and goods weren’t enough, get ready to add another thing to your list of rising monthly bills: insurance costs. Premiums for home and auto insurance are expected to go up, according to major insurance companies in Texas.

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 for auto repairs are more expensive due to inflation. On the housing side, supply constraints and high construction costs are also driving up premiums.

This transcript has been edited lightly for clarity:

Texas Standard: It sounds like the insurance companies are trying to prep Texans for rising premiums. What’s putting the pressure on them? 

Asher Price: There are a number of factors that are going on, both on the auto insurance side and the home insurance side. During the pandemic, you’ll remember the highways were empty during the first months of the pandemic, the first year of the pandemic. And insurance rates took a big dive, and now they’re climbing back up as people are back in their cars, getting back into accidents, and having to take their car to get fixed.

Meanwhile, there are all these supply chain issues and labor shortage issues. So your car mechanic’s getting paid more than he or she used to get paid; the parts to fix your side-view mirror cost more than they once did. So that’s all getting added up into the insurance claim. And so that’s why insurers are saying that they have to raise your auto rates.

How much of an increase can consumers expect to see? 

The insurance rates are going to go up by at least 9% if you’re a customer of the company Germania Insurance. They’ve put out a bulletin that they could see that much of an increase. The average auto premium I think was as low as about $1,400 in Texas at the outset of the pandemic. Late last year, it was up to $1,600. And so, you’re going to see that number jump up as well.

Home valuations have spiked – is that something that insurance companies are trying to cover as well? 

Yeah, that’s right. I mean, on the home side, you have some of the similar problems as on the auto side. I mean, anybody who’s tried to buy a new home, of course, that price has gone through the roof. But also just if you’re trying to fix up your home, the cost of lumber remains high. The amount you have to pay, the person framing out your house or the plumber if you have a home problem that you need to make a claim on, all these things have gone up.

Meanwhile, I should say one other thing on the auto side is there’s been a big problem with thefts of catalytic converters. Probably a lot of listeners, either this has happened to them or they know somebody who’s had a catalytic converter stolen from the bottom of their car. And so, that’s driving premiums up as well on the auto side.

Once you start to talk about the sort of record levels of inflationary increases that we’ve been seeing, well, you can expect this to sort of cascade across the economy. Is there anything consumers can do to find better prices?

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

But in terms of shopping around for insurance, the Texas Department of Insurance has a handy tool for trying to find where you can compare rates. And also there are companies like The Zebra and other companies where you can kind of type in what kind of insurance you need and online and they’ll spit out at you different options.

If you found the reporting above valuable, please consider making a donation to support it here. Your gift helps pay for everything you find on texasstandard.org and KUT.org. Thanks for donating today.