
By Lorie Lewis Ham
Prices on everything in our lives seem to keep going up these days, and this includes the price of insurance—whether it be for your car or your home.
According to an article in USA Today, the average auto insurance rate in the U.S. is expected to go up by 7.5% in 2025, as stated in a recent analysis by MarketWatch Guides. The hikes will add an average $182 to the average annual full-coverage premium nationwide, raising it to $2,615 from $2,433. Drivers in several states face increases of at least $200. An increase in national disasters such as floods, wildfires, and hurricanes are to blame for a lot of the increase. Also, the shortage of vehicle parts, skilled auto repair workers, and supply chain problems that have continued since early in the COVID pandemic.
Not only are national disasters an issue because cars may need to be repaired or replaced more often, but also the cost of parts needed continues to go up. An article on Noble Quote.com states that inflation is hitting the auto industry hard and has touched every aspect of the auto world. Labor and parts costs have gone up significantly. Tariffs are also playing a part in that rise of costs. Another factor, is that cars are more expensive and complicated to fix as the technologies in newer cars require more specialized diagnostics and repairs, hence higher labor costs. Freeman Insuranceservices.com says for example, repairing an EV often involves more labor hours and expensive parts compared to traditional internal combustion engine vehicles.
Homeowners insurance is also facing an increase in cost. According to Trusted Choice.com, home insurance has increased by an average of 21% across the U.S. in the last couple of years. Some of the reasons for the increase include the same things that made car insurance go up, such as an increase in national disasters, including wildfires in some areas of the country like California. Speaking of California, it is one of the many areas where a lot of insurance companies have stopped writing coverage because they are high risk areas. As natural disasters worsen and become more frequent, some home insurance companies just aren’t willing to continue writing policies in the states that are deemed high-risk.
Trusted Choice.com goes on to state that another factor is that the construction industry has also seen a labor shortage. In August of 2024, there were 368,000 construction job openings in the U.S., which was an increase of 138,000 from the previous month. This number was more than double that expected by the U.S. Bureau of Labor Statistics. Also, just like with cars, inflation and supply chain issues have made the cost of repairing or rebuilding a home much more expensive.
The rise in insurance rates has been going on for a while now. According to an article on Lending Tree.com, home insurance rates climbed 40.4% cumulatively across the U.S. over six years.Rates stayed relatively level from 2019 through 2021, with the biggest jump of 3.0% in 2021. They have since risen faster, with increases of 5.4%, 11.0% and 11.4% in 2022, 2023 and 2024, respectively.
While this continued rise in insurance rates may be concerning to the consumer, just like any other business, insurance companies can’t afford to lose money. So, with the rising costs of repairing your home and car, insurance rates also have to go up.
There are a few things consumers can do to combat some of the rising costs of insurance. In a recent CNBC.com article, they share seven ways to lower car insurance. These include shopping around, paying your premium annually if you are able, bundling your car and home insurance, and being aware of any discounts you may qualify for. Kinplinger suggests many of the same things for reducing your home insurance, such as bundling and asking about any discounts you might qualify for. There may also be discounts available through organizations you belong to. Implementing simple home upgrades can often lead to savings on your homeowners insurance premiums as well, and you can lower your deductibles.
Mennonite Insurance Services is here to answer any of your questions about your insurance, and to help you see if there are ways you can bring the costs down. You can contact them at (559) 638-2327.