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Update on the price of insurance policies for 2023




To start, I am going to try to give you a simplified explanation on how insurance works.


The general principle with insurance is that everyone pays into one single pot of money. Then, when a consumer (like you or another policyholder) makes a claim, the insurance company pulls from the pot everyone paid into to provide that payout.



One part that determines how much you have to pay into the pot is your personal level of risk. Do you get into a lot of accidents? Do you live in an area that has a higher rate of theft/fire/vandalism? Your premiums may be higher if the probability of you receiving a payout within the policy term is high. However, that doesn’t mean the amount you get from the pot will be lessened when you require a payout for a claim. There are also external factors that play into the rate everyone pays into the pot. For example, if there was a large hailstorm or forest fire that devastated your state, the insurance company likely took a hit paying out those massive claims. As a result, the company will increase the premiums for everyone in that state. It is all about statistics. It all is about the money coming in vs the money going out, the likelihood based on statistics, your traffic violations, crime in the area, etc. The insurance companies are very regulated on the amount they have to keep in what they call reserves (a amount that is in the pot to be able to pay the claims). They have to basically plan for the worst case scenario and have a specified amount in the "pot" to pay claims should that need arise. The rate increases that are overall rate increases (where they take a increase overall in a state or area) all have to be approved by the states insurance bureau


s. 2023 rates have gone up and unfortunately I do not see it going down anytime soon. There are A LOT of things causing this but a major one is inflation. The cost of everything has gone up. The cost of supplies to fix a home with a claim or to fix a vehicle with a claim has gone up dramatically. The chip issue with cars has caused rentals to be more expensive and even a few months ago it was next to impossible to get rentals. Add all of that to parts not being readily available and you have people in a more expensive rental for way longer waiting on the parts to fix their vehicles. Same with home claims where people need temporary housing. They are having to be there longer due to supplies being super short stocked and contractors being backlogged. Car values have also gone up. To add to it car thefts are going up. Last year there were a lot of hail storms and even fires that caused damage to homes and cars. So to pinpoint why your insur


ance has gone up is very difficult as there are so many factors but the chances are it is not your fault. Everything is just going up. On top of all of that, a lot of carriers are temporarily suspending new business due to the high loss ratios (number of claims) so that makes there less options. That being said, that is why we are an independent agency. We ca


n "shop around" for the best coverage at the best price for you.

If we can be of assistance to you just reach out.



Here are a few articles if you would like more information on this subject.

  1. https://legaljobs.io/blog/motor-vehicle-theft-statistics/#:~:text=There%20were%201%2C013%20car%20thefts,vans%2C%20and%20motorcycles%20was%2018.

  2. https://www.nytimes.com/2023/05/05/your-money/car-insurance-rates.html




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