FAQ: Why are my rates going up?

FAQ: Why are my rates going up?

January 19, 2023

As insurance agents in Township, MI, the question that we get asked the most at renewal is some variation of “why did my premium go up?” In this blog we will do our best to explain why we are seeing these rate increases, specifically on home and auto insurance policies.

Weather-Related Catastrophe Losses:

Unfortunately, 2022 saw a frequency of severe losses which has not been seen before in the Midwest. This caused insurance companies to pay out a greater number of catastrophic losses (losses over $2M in a local area due to one event) than ever before. Because of this increase in catastrophic losses, the reinsurance companies (companies who provide insurance to insurance companies) are increasing the primary insurer’s rates by 10% or more, which trickles down to the insured.

The sad reality is that weather is truly a wildcard. It is unpredictable, and very hard for insurers to predict, so they must adjust rates to compensate.


Anyone who watches the news knows that inflation is a big issue in the U.S. Building materials are still higher than the overall level of inflation in the U.S, and although lumber costs have come down, the cost of other materials have gone up with supply chain bottlenecks and labor shortages.

When it comes to auto insurance, the average payout/value on a totaled vehicle is still 50% higher than it was pre-pandemic. Supply chain issues are increasing wait times to get the correct parts into collision shops to fix vehicles and inflating the value of those parts. Because of these two issues, physical damage rates are seeing an increase on auto policies.

Social inflation:

“Social Inflation” is a term that is being used to describe the trend of juries awarding more and more money to claimants in insurance cases. It seems like everywhere you go there are billboards with a personal injury attorney’s face on it. Personal injury attorneys are advertising more than ever and winning larger settlements than ever before. These increased payouts are the single largest driver of liability rate increases.

To sum it all up: Providing coverage is getting more expensive for insurance carriers. Because of this, they must increase premiums to compensate.

If you have any questions related to your policy specifically, please contact our office.