Grapevine

6 strategies to help mitigate rising car and home insurance costs

The cost of insuring your most expensive assets has skyrocketed. While overall inflation has slowed, insurance costs are taking a bigger bite out of many household budgets. The average annual rate for homeowners insurance increased by nearly 20% between 2021 and 2023 — and homeowners can expect another 6% increase in 2024, according to Insurify, a virtual insurance agent. That would bring the average policy cost to $2,522 by the end of the year. Car insurance premiums have also shot up. The average cost of motor vehicle insurance jumped 16.5% from August 2023 to August 2024, according to the Bureau of Labor Statistics. Bankrate estimates that in September the average cost for full coverage car insurance is $2,348 a year.

Several factors contribute to climbing home insurance rates, including increasing costs for homebuilding supplies and repairs, a significant rise in litigation around claims, and the greater frequency of weather-related events, said Shannon Martin, a licensed insurance agent and writer for Bankrate. Extreme weather events, higher replacement and repair costs, and increased medical expenses after accidents have boosted car insurance rates, experts say. Still, there are ways to mitigate rising premiums. Here are six strategies to consider:

1. Shop around for a new insurer

Consider switching to another insurance company. While most people stick with their car or home insurer from year to year, it's wise to shop around, experts say. About 37% of drivers say they will or have already received a quote from a new insurer in response to rising insurance rates, and 27% have or plan to switch insurance companies, according to a new survey by Autoinsurance.com. Shop around for car and home insurance once a year to make sure the rates you're paying now are still competitive, experts say. You might also want to compare rates if you have a life change that could affect your rate. "If you move, get married or buy a new car, that's also a good time to shop around," said Maya Afilalo, an insurance analyst at Autoinsurance.com. Even though extreme weather events have adversely impacted many insurers, companies are at different stages with how they have adjusted. "So a company that you may be with now that may have a much higher rate than a company that's kind of already in a recovery stage," said insurance agent Mike Barrett, who owns the Barrett Insurance Agency in St. Johnsbury, Vermont. "Shopping could really save you some money." Compare costs by getting quotes from a few insurers before renewing your policy. You can go online or use apps for insurance marketplaces to get quotes from several companies at once. Or you may want to talk with an independent insurance agent — doing so is typically free, because they usually get a commission from the insurer for selling you a policy. You can find an agent in your area through the Independent Insurance Agents and Brokers of America. Lower premiums aren't the only factor to consider. Check out AM Best and Demotech, which rate insurers' financial strength and reliability. "What you're looking for is the financial strength of the carrier, which shows their ability to pay future claims, and also understanding what their history of paying claims has been in the past," said insurance agent David Carothers, a principal at Florida Risk Partners in Valrico, Florida.