Why Are Insurance Rates Still Going Up?

Inflation & and Insurance Rates

Why Insurance Rates Are Rising: What You Need to Know in Minnesota and Wisconsin

We’ve all heard about inflation—the anxiety-inducing topic that’s affecting prices everywhere, including right here in our hometowns. Unfortunately, the insurance industry hasn’t been spared from inflation’s impact. From home insurance to auto coverage, policyholders are facing rate increases. But WHY are insurance rates still going up? And what can you do to manage your insurance costs?

Why Does Inflation Cause Insurance Rate Increases?

Auto insurance rates are on the rise, and many drivers in Duluth, Superior, Cloquet and surrounding communities are wondering why. The incredible demand for both new and used vehicles, coupled with rising inflation, means that the cost to repair or replace a vehicle has skyrocketed. Auto body shops are charging more, and parts are harder to find due to supply chain issues. As a result, insurance companies have to raise premiums to cover these increased costs. It is very likely this has been reflected in your recent insurance auto policy renewal.

Home insurance rates are also increasing. The cost to rebuild a home has surged due to rising building material prices and labor shortages. In fact, the nationwide average cost to rebuild a home went up by 17% from January 2020 to January 2021. Even though the construction market has slowed, costs remain at an all-time high. Whether you’re in Minnesota or Wisconsin, this means higher home insurance premiums to account for the increased replacement costs.

What Else Might Be Causing Your Insurance Rates to Increase?

  • Recent Claims: Have you filed a claim for storm damage or water backup due to heavy spring rain in Duluth or Superior? Recent claims, even those from natural disasters, can result in higher premiums.
  • Moving Violations: Have you received a speeding ticket or been caught texting while driving? Traffic violations in Minnesota and Wisconsin are a common reason for rate increases, and any infractions on your record will stay for at least three years.
  • Life Changes: Added a teenage driver to your policy? Changes such as new drivers, a longer commute, or even finishing school can impact your auto insurance rates. If you’re a Minnesota resident benefiting from a “Good Student” discount, that could disappear if you or your child are no longer eligible.
  • Buying a Vehicle: New or used, vehicles are 40% more expensive now than in early 2021. This significant price jump means that your new vehicle, whether you’re in Cloquet, Hermantown, or elsewhere in Minnesota or Wisconsin, will cost more to insure.
  • Your Zip Code: Where you live matters! Urban areas like Duluth and Superior see higher insurance rates due to increased traffic and accident rates, while rural areas may face higher costs due to longer emergency response times for fires and accidents.

How to Combat Rising Insurance Rates

The good news is there are ways to manage these rising costs:

  1. Bundle Your Policies: By consolidating all your insurance policies—auto, home, boat, etc.—with one provider, you could qualify for significant multi-policy discounts.
  2. Drive Safely: Follow all traffic laws, avoid texting while driving, and always wear your seatbelt. Safe driving habits are key to keeping your premiums lower.
  3. Update Your Home: If you’ve recently installed a new roof or paid off your mortgage, let your agent know. You may qualify for home insurance discounts, especially in regions like Cloquet and Hermantown.
  4. Increase Your Deductible: A higher deductible means lower monthly premiums. This strategy is ideal if you rarely file claims but want to keep your overall costs down.
  5. Consider Individual Policies for Young Drivers: If your adult child has driving violations, moving them onto their own policy can help lower your family’s overall insurance rates.
  6. Drive Less: If you can bike, walk, or take public transit in Duluth or Superior, some insurance companies may offer a discount for reduced mileage.
  7. Pay in Full or Set Up Monthly EFT: Many insurers offer discounts for paying your policy upfront or setting up automatic electronic payments.

Stay Informed: Talk to Reliable Insurance Agency

At Reliable Insurance Agency, we’re here to help you navigate these rate increases. Whether you live in Duluth, Superior, Cloquet, Hermantown, or anywhere in Minnesota or Wisconsin, we can work with you to explore options that may help reduce your premiums. Don’t wait until your renewal arrives—contact your agent today to discuss your policy and find potential savings.

Inflation may be pushing prices up, but with the right strategies, you can keep your insurance costs under control. Reliable Insurance Agency is committed to helping our clients protect what matters most while keeping premiums manageable. Contact us today to learn how we might be able to help you with all your personal, business, and health insurance needs.

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