Prices keep climbing, but there are ways to get relief.

Key takeaways:

  • Insurance costs are going up for home, auto, and health care
  • Policyholders will pay more for their current plans
  • Shop around for the best rates

From health to auto to homeowners, insurance rates in New York have risen across the board this year. There are many reasons for this, among them inflation, climate change, bottlenecks in the supply chain, and the lingering effects of the pandemic.

Unfortunately, the higher the rates go for these three essential services, the less money people have to spend on optional – but arguably necessary – products like life insurance. So it’s vital to shop around for the most competitive rates.

Below, we explore how high rates have increased for each segment and some best practices for finding the most affordable premiums.

Health insurance

Health insurance rates this year are expected to increase by an average of 9.7% for individuals and 7.9% for small-group plans. While these increases may feel steep, they’re actually significantly lower than the level of increase insurers wanted (19% and 16.5%, respectively). This difference likely saved individual policyholders $167 million and small-group plans an estimated $632 million.

That being said, these increases are still above and beyond what people were expecting. Last year, for example, rates went up only 3.7% for individuals and 7.6% for small group plans. Regardless, state insurers are arguing that these rates aren’t high enough. Why? Because drug companies, providers, and hospitals are charging significantly more for their services than in previous years, making it far more expensive for companies to do business. The fallout from the pandemic has also contributed to rising costs due to ongoing testing, treatment, and vaccines placing more demand on the health care system.

Auto insurance

Insurance rates on automobiles are expected to rise by 8.4% nationwide this year, and drivers with accidents or moving violations on their records could see their rates skyrocket by as much as 52%. On average, American drivers spend almost three percent of their annual income on car insurance. And it’s even worse in New York, where consumers have to pay as much as five percent of their annual income on car insurance.

So why, exactly, are auto insurance rates on the rise? There are a variety of reasons:

  • Workers returning to the roads and the office. As more people leave their Zoom meetings and home workstations behind and go back to the office, they’re putting more miles on their cars, requiring more repairs, and getting into more accidents. And that all means more expensive insurance.
  • Higher costs for purchases and repairs. Supply chain slowdowns mean longer wait times for automotive parts. And inflation means higher costs to produce those parts. This also means fewer new and used cars for those in the market to buy. All of this drives up the costs of claims.
  • A warming world. Every hurricane and severe storm that damages or destroys cars pushes up auto insurance rates. As these natural disasters continue to increase in frequency, the places most affected, particularly along the coasts, will see their rates continue to rise.
  • The growing popularity of electric vehicles. As the technology for electric vehicles (EVs) continues to improve and become more widely adopted, EVs are taking on an increasing percentage of market share. Unfortunately, they cost 25% more to insure than traditional gas-powered vehicles.

The good news is that there are steps you can take to lower your auto insurance rate. These include increasing your deductible, maintaining a safe driving record, and reducing your annual mileage as much as possible.

Homeowners insurance

Rates for homeowners insurance are going up by 9 percent this year, from an average of $1,636 to $1,784. Many of the same themes mentioned earlier are at play here, with supply chain issues, material costs, and inflation all contributing to the increase. Like cars, homes now cost more to fix, and insurers pass those on to policyholders. Specific rates vary depending on zip code, coverage level, and credit score.

Let’s dig deeper into some of the reasons for this increase.

  • Climate change. As mentioned earlier, the higher frequency of floods, wildfires, and earthquakes means higher rates. And if you live in a FEMA-designated “very high” risk zone, you could pay nearly 2.5 times more for homeowners insurance than those living in “very low” risk areas.
  • Inflation. The global financial pressures that raise your grocery bill also have an impact on your homeowners rates. Home repairs take longer and cost more than ever before, and homeowners insurance rates reflect this.
  • Fire damage. Homes built more recently are constructed with different materials, including pressed wood, that make them more susceptible to fire damage. Couple that with the effects of climate change, including more frequent and intense wildfires, and you have a recipe for higher insurance costs. Prospective homeowners should look into less-flammable materials, which some insurers will discount. Also consider installing fire safeguards like a sprinkler system.
  • Water damage. The days of washer/dryers living exclusively in the basement are long gone. It’s now just as common to put them on the second or third floor, which increases the chances of water damage. Again, climate change is obviously a factor here as well, with the possibility of extreme weather and coastal flooding leading to higher premiums. Luckily, there are things you can do to offset these costs – install a sump pump, raise the foundation, and waterproof any ground-level windows. An ounce of prevention can lead to cheaper rates.

There are other ways to save on home insurance, as well, including bundling your home and auto policies. Ask your insurer about additional discounts, and if you don’t like the answer, shop around for better rates.

Get help when you need it

New York is one of the country’s most expensive markets, and, with rates on the rise across all major insurance categories, it pays to have a partner who can you help wade through the fine print and find a policy you can afford. NICRIS Insurance can be that partner, advising you on everything from premiums to prevention. Schedule an appointment today and let us help you start down the road to finding more affordable insurance coverage.