Caleb Meriwether, Haven Insurance Partners, visits with Dan Reaves, host of ‘The Dan Reaves Show,’ today, and each Wednesday at 3:30 p.m., to discuss all things insurance.
Have you noticed your home or auto insurance premium increasing—even if nothing has changed on your end? You’re not alone. Insurance pricing can feel like a mystery, but there are a number of understandable reasons behind it. Here’s a simple breakdown of the key factors that influence your personal insurance rates.
- Claims History and Loss Payouts
Insurers look at how often you’ve filed claims and how much those claims have cost. If you’ve had recent claims—whether for an auto accident, a roof leak, or a liability issue—you may see a rate increase. Even claims from weather-related damage can influence future premiums if your area has been hit hard.
- Perils Covered by Your Policy
A “peril” is an event that can cause a loss—like fire, theft, wind, or hail. Some policies cover only basic perils, while others are “all-risk” or “open peril” policies with broader coverage. The more risks your policy protects against, the more expensive it tends to be. Optional endorsements (like sewer backup or identity theft coverage) also add to your premium.
- Deductibles
Your deductible is the amount you pay out of pocket before insurance kicks in. Choosing a lower deductible ($500 vs. $2,000) usually results in a higher premium. Raising your deductible is one of the most direct ways to lower your rate—but it means you’ll pay more in the event of a claim.
- Rebuilding Costs and Inflation
Home insurance rates are heavily influenced by the estimated cost to rebuild your home—not its market value. With building materials, labor, and supply chain issues causing construction costs to spike, insurers are adjusting premiums to reflect today’s replacement values. This often leads to higher rates, even without a claim.
- Vehicle Repair Costs and Technology
Auto insurance has also seen inflation. Cars today are packed with sensors, cameras, and technology. Even minor fender-benders can cost thousands to fix, which raises the average loss cost for insurers—and in turn, the rates for everyone.
- Location-Based Risk
Where you live plays a big role in your rate. Insurance companies track data on local crime, traffic congestion, storm frequency, and even wildfire risk. A neighborhood with frequent theft or weather claims may have higher base rates than a quieter, lower-risk area.
- Policy Features and Add-Ons
Enhanced replacement cost, brand-new car replacement, or scheduled personal property coverage (for jewelry, fine art, etc.) all provide more protection—but also add to your premium. Reviewing your coverages regularly ensures you’re not paying for features you don’t need—or underinsured when it counts.
- Insurance Score and Financial History
Many insurers use a credit-based insurance score to predict how likely a policyholder is to file a claim. A lower score (due to missed payments, high balances, etc.) may result in a higher premium, even if you’ve never had a claim.
What Can You Do?
- Raise your deductible to lower your premium—but make sure you have savings to cover it.
- Bundle your home and auto insurance with the same carrier for a discount.
- Ask about discounts for alarm systems, new roofs, safe driving, or loyalty.
- Review your coverage annually to adjust limits or remove outdated endorsements.
Insurance isn’t just about price—it’s about peace of mind. Understanding what drives your rate can help you make better decisions, stay protected, and potentially save money.
