Overcoming Car Insurance Inflation & Home Insurance Annual Increases



You don’t have to look far to find that throughout 2022 and into 2023, inflation has raised the cost of living for Americans across the board. Even as optimistic forecasts show inflation slowing, insurance policies look to be higher for the long haul. This means car insurance inflation will continue to raise rates for your auto coverage.

The same is true for your home insurance annual increase, an unsettling trend for homeowners. But things are a bit more complex than economic trends alone. There are several reasons that your coverage options are getting more and more expensive.

Thankfully, both drivers and homeowners have options to save and avoid paying more due to inflation for car insurance or home insurance prices going up.

Here at Freedom Insurance Group, we’re here to help you save money while keeping your coverage regardless of the economy. Learn how to save money and enroll in coverage for less despite outside factors working against you.

Does Inflation Affect Car Insurance?

Yes, car insurance goes up with inflation as the cost of doing business becomes higher for insurance providers, therefore, premiums are increased to account for these elevated costs. Car insurance inflation isn’t just the costs controlled by your provider, further adding to the expenses.

Why Are Auto Insurance Rates Increasing?

There are plenty of factors that go into raising your auto insurance premium. Here’s how these factors breakdown further:

  • Because inflation affects a wide range of industries, it’s going to cost more to restore losses due to elevated costs for parts and labor. If it costs more to restore losses following a claim, you can expect premiums to rise as a result.
  • Vehicles are also more and more reliant on advanced technology. For example, it’s not just a bumper anymore, that car bumper now has cameras, sensors, etc, so when insurers need to repair these new intricacies it raises costs for everyone.  Another part of the problem with inflation specific to the auto industry continues to be the chip shortage. Furthermore, car insurance inflation in 2023 is hurt further by geopolitical activity in Asia where many microchips are manufactured.
  • The general costs of operating a business from overhead to labor to office supplies, etc., have also gone up and auto insurance companies account for this when setting premiums.
  • Claims activity has increased significantly for both home and autos. From increased weather claims ie freezes to more multi-vehicle accidents due to texting while driving, it raises costs for everyone.  Theft claims have been increasing lately as well.

As you can see, car insurance going up due to inflation is a multi-faced issue that persists even as inflation decreases in other industries.

Saving on Car Insurance Despite Inflation

Suffering from car insurance increase from inflation means your dollar doesn’t go as far, but drivers can still find ways to save. Here are some of the easiest ways drivers can save money even through economic downturns:

  • Each insurance company is going to create a different premium for your auto coverage. Shopping around and comparing rates is critical.
  • Speaking with a licensed insurance agent can help you find and apply discounts to your coverage that you may otherwise be missing out on.
  • Bundling your home and auto insurance is always a great way to save.
  • You may be able to cut the cost of your car insurance premiums over time by driving safely and participating in safe driving programs when applicable.
  • Using automatic or paperless billing cuts overhead for carriers and some of these savings are often passed down via discount as a result.
  • Increasing deductibles are removing “bells and whistles” coverage can help, please speak with a representative before doing so to get the best advice.

The 2023 Home Insurance Annual Increase Is Also on the Rise

Every state is experiencing home insurance inflation, but studies show that no one is experiencing faster rate increases than Colorado (17.5%) and Texas (16.0%). This means for homeowners in both The Centennial State and The Lone Star State, your home insurance annual increase is on the rise more than usual.

Experiencing a home insurance cost increase is a general trend within the industry, but these types of increases are abnormal. The trend for a home insurance premium increase we see in 2023 is similar to what auto policies are also suffering from.

Inflation in the housing market and construction industry has also led to higher prices for homeowners. But even without inflation, a home insurance rate increase is exactly why it’s important for homeowners to review their coverage at least every 6 to 12 months. This way, you can understand whether or not you are overpaying for your home’s coverage.

Turning a specific focus on the home insurance inflation rate, there are several options you can take to protect your finances. This includes inflation protection built into your homeowners insurance policy to plan ahead for what the future might hold.

What Is Inflation Protection in Home Insurance?

With some home insurance policies, inflation-adjusted benefits are made available in the future or continue to be paid in perpetuity. The objective of an inflation guard is to prevent inflation from eroding the relative buying power of dollars awarded as benefits over time.

A problem some homeowners run into is having a homeowners insurance policy that is built to help restore major losses, however, doesn’t account for an increase in homeowners insurance rates due to inflation.

This means that those suffering a loss without inflation protection home insurance policies may find that there is a difference between how much it costs to restore their home and the amount of coverage their policy limits provide.

Accounting for the cost of labor and materials both today and tomorrow is important when selecting your coverage. You’ll want to have a policy capable of completely rebuilding your home should the unimaginable strike, such as a fire.

A licensed insurance agent can help you sift through policy options and limits to build protection that fits your needs in the present and the foreseeable future.

Saving Money on Home Insurance Despite Inflation

Fighting against inflation is important for homeowners just as it is for drivers. Thankfully, there are plenty of options for cutting costs and they are often related. This means you can save on both auto and home policies at the same time. Here are the best methods for homeowners:

  • Inflation protection isn’t the only way to adjust your policy and save on premiums. If you raise your deductible, you can enjoy lower monthly premiums. However, be aware that this means should a loss occur, you’ll have to spend more out of pocket before receiving reimbursement.
  • Shopping among different carriers can help you unlock better savings, more discounts, and unique bundling opportunities. All of which can help you save more. Speaking with a licensed insurance agent can help you streamline this process.
  • Going paperless or using automatic billing are great ways to cut costs on your premiums.
  • Improving your credit score can also help you enjoy lower rates for your home insurance policy.
  • Lowering coverages can lower premiums but comes with more risk. Please consult with your agent before removing coverages or endorsements.

It’s Not Just Inflation Raising Home and Auto Premiums

In today’s economy, there is no doubt that car insurance inflation is playing a part in increasing your monthly bills. House insurance price increases are also affected by inflation’s grip on the industry. But there are other factors to be aware of:

  • The increase in both home and auto claims is elevating premiums as carriers compensate for these reimbursements.
  • Changing weather patterns are an increased threat to both vehicles and homes while also contributing to the increase in claims.
  • Not only are weather patterns changing but there have been harsher weather events such as costly hurricanes, wildfires, and floods that are elevating premiums.
  • Vehicle thefts are on the rise and sadly the National Insurance Crime Bureau (NICB) ranks Colorado and Texas in the top 10 states by rate and top 5 states by overall volume.

When carriers are determining your premium, whether it be for home or auto, they are all looking at the amount of risk you pose by being a client. If are a riskier prospect as a client, your premiums will be higher and likewise, if you have fewer risks, you’ll likely save on coverage.

But that’s only part of the puzzle. Each company is going to look at a variety of factors, all similar factors, but viewed very differently from brand to brand. This means that you can look at different companies for the same coverage, yet receive very different prices for your premiums.

Every brand claims to be the most affordable, but the truth is it depends on a variety of personal and outside factors in regard to each brand’s algorithm. To determine which provider offers the lowest premiums for your coverage needs, it’s important to shop around and compare the rates of many different carriers.

A Leading Driver of Rising Property Insurance Costs

When the eye of the storm wreaks havoc, many commercial properties are faced with the aftermath. In 2022, hurricanes, floods, tornadoes, wildfires and blizzards continued to strain the industry at an alarming rate. Catastrophes plus the mounting costs of building materials and four other driving forces are increasing the cost of property insurance.

Property Rate by the Numbers
Travelers Catastrophe Losses:  Over the past five years in the United States, 89 events have generated losses of more than $1 billion each.¹
Travelers Reinsurance:  In early 2023, the gap between reinsurance supply and demand was estimated at $60 billion, three times what it was the previous fall.²
Travelers Property Replacement Costs:  Over the past three years, the cost of structural steel increased by 55% and the price of lumber increased by 35%.³
Travelers Skilled Labor Shortage:  Associated General Contractors of America found that nine out of 10 contractors are struggling to find skilled labor and are delaying projects as a result.4

How To Save Despite Car Insurance Inflation or a Home Insurance Cost Increase

There are plenty of discounts available and ways to save, but without comparing your rates among many different brands, you are likely leaving money on the table. This is why we’ve partnered with over 25 top-rated insurance carriers to help drivers and homeowners across Texas and Colorado save money through their policies.

Remember, each brand is going to assess your risk differently and if you don’t take the time to shop around, it’s impossible to compare prices for your coverage. But this can be time-consuming which is why we’re here to help.

Since 2005, we’ve been helping our clients save an average of 40% on auto insurance and home insurance by creating personalized coverage, finding the lowest price possible, creating unique bundles, and applying the best available discounts.

Because we only work with top-rated insurance carriers you can rest assured that your policies are not only affordable but reliable. Contact our agents today or fill out our online form for an auto insurance quote or homeowners insurance quote.

No matter what outside forces are affecting your premiums, our team is here for you. From car insurance inflation to home insurance annual increase in your premium, we have the tools, knowledge, and experience to help you save!

Contact Us

Freedom Insurance Group
3861 Long Prairie Rd Ste 110
Flower Mound, TX 75028
Phone: (972) 798-3769


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