Combating Rising Auto/Home Insurance Rates In 2014

While the post-recession era till 2013 was mostly related to recovery, the economy is looking to take a different shift in 2014. And combined with policies from the Fed, it is leading to changes based on indicators such as homeowner and auto insurance rates.

The recent statement from Federal Open Market Committee (FOMC) has brought important changes with aspect to interest rates and tapering. With the quantitative easing program being slowly removed, interest rates are expected to increase, which is also leading insurers to demand higher rates.

The notion of rising auto insurance rates is being seeing in numerous states such as Illinois, where the expected hike is around 2.5% to 3.5%. Likewise, rating bureaus for homeowners are also indicating substantial increases. The extreme of this phenomenon is evident in the case of North Carolina, where the NC Department of Insurance is being asked to increase the average rate by 25.3%.

Rising insurance rates and remedies

Apart from government policies, the rising construction costs in the U.S. are contributing to increased insurance premiums. This is because based on higher construction cost, homeowners will have to opt for higher replacement cost coverage so that they can be reimbursed according to the actual amount of the construction.

Obamacare is also having a trickledown effect on auto insurance rates. This is because the rising cost of healthcare as a result of the policy means that insurance companies can also end up paying bills of accident victims, so some of them will start raising rates because of the increased costs.

The weather also affects auto and home insurance rates. According to a study cited by liveinsurancenews, individuals who buy their policies during winter months end up paying a lot more than they would have if they opted for insurance during the summer months, so the timing makes a substantial difference in the rates.

With the rising rates, the best defense lies in a proactive approach. Mills Insurance Services point out there are a number of factors that affect the cost of auto and homeowner insurance, some that you can’t control. But you can always explore the options available with a review of your current standing (policy, status, etc.). Also, reputable insurers might also offer you a discount if you decide to go with homeowner and auto insurance from a single source.

In case of homeowner insurance, filing more claims can lead to higher insurance premiums, and a study claims that even making a claim results in a 9% average increase in homeowner insurance across the U.S. The costs can be lowered by handling small claims yourself.

Another way to lower the cost of auto and homeowner insurance is to improve your credit score. An independent study conducted by the FTC to determine the relationship between risk and credit history revealed that credit-based insurance scores can be used to forecast the risk and premiums, so a good credit score will improve your chances of qualifying for lower a lower rate.

With interest rates expected to rise further this year, more developments are expected with respect to insurance and similar commodities in the financial market. In terms of personal finance, there is a need for consumers to be wary of the changes and adapt accordingly.