Why Is My Insurance So High?

We’re halfway through the year, and many customers have renewed their policies or are heading into renewal season. If your insurance premiums increased lately, you’re not alone. 

Whether it's Personal insurance or Commercial insurance, rates change as the industry does. Navigating a perfect storm of inflation, increasing claims costs, economic shifts, and fraudulent activity, premiums can fluctuate. 

However, insurance doesn’t need to be intimidating. Hastings wants to inform and empower you to take control of your policy. 

Inflation and the Industry
Inflation impacts everything—from groceries to gas—and insurance is no exception. Rising costs for labor, replacement parts, medical care, and home repairs directly impact claim costs. Those costs impact rates, across the board.

• A small car accident today may cost 20–30% more to fix than it did a few years ago. This is because parts and labor costs have gone up.
• Rebuilding a home after storm damage costs much more because of high construction prices and delays in supplies.

Insurers predict risk and cover unexpected losses. When the cost of these losses rises suddenly, companies must adapt. That adjustment often comes in the form of higher premiums.

Fraud and Padded Claims - How they Hurt Everyone.
Another factor driving up premiums- fraudulent or exaggerated claims.

While most policyholders are honest, even a small percentage of padded or fake claims can skew the math for everyone. Think of:

• A car accident where the damage was minor, but the repair estimate is inflated.
• A homeowner filing for a repair unrelated to the actual insured event.

Many people rarely or never file claims, but it’s important to note two things – 1.) claims are just a small portion of the factors that impact rates; 2.) increases in claims increase BASE rates, which means the base rating structure that the insurance carrier submits to the state for review & approval, fluctuate for everyone. From there, individual rates fluctuate based on a variety of other factors, discounts, etc. While there may be base rate increases, they aren’t just due to other people having claims. 

Economic Shifts = Industry Shake-Ups
The broader economy also plays a significant role in the insurance landscape. Interest rates, investment returns, unemployment, and even housing markets influence how insurers rate policies. For instance:

• In low interest rate environments, insurers make less money from investing customer premiums. This is one of their main profit strategies.
• If the economy is struggling, there may be more claims. For example, arson or theft often increase during tough times. People may also be more tempted to commit fraud.

All these pressures add up. They make insurers more cautious. Insurers may raise rates or leave some markets completely.

How Insurance Companies Stay Profitable
Insurance companies are businesses that balance three key things:

1. Underwriting – Pricing policies accurately based on risk.
2. Claims Management – Controlling losses by detecting fraud and resolving legitimate claims efficiently.
3. Investments – Earning money on premiums before they are needed for payouts.

To stay profitable and able to pay claims, insurers must predict risks accurately. They avoid underpricing policies and control operating costs.

How You Can Keep Your Rates Stable
You can’t control inflation, but you can take a few steps to keep your premiums more level:

• Bundle policies – Combining home and auto insurance can lead to significant discounts.
• Maintain good credit – Carriers often use credit-based scores to help determine risk.
• Avoid small claims – Filing minor claims can lead to increased premiums; sometimes it’s worth handling out of pocket.
• Keep your property safe – Security systems, updated wiring, or safe driving habits can lower your risk (and your rates).
• Shop smart – Don’t just compare rates, when shopping your policy. Make sure you’re also comparing coverage quality, not just price. It's not just about bringing your price down. It's about getting the coverage you need, at the price that's right for your situation. 

A rate increase is never ideal, but make sure you understand your coverage and your policy. 

Why Coverage Matters More Than Ever
It can be tempting to reduce coverage to save money—but being underinsured can cost you more in the long run. Whether it’s medical bills, property damage, or liability, insurance is your financial safety net. The right policy can help you:

• Avoid devastating out-of-pocket costs
• Replace or repair your home or vehicle after disaster
• Cover legal expenses in case of accidents

How Insurers Do Try to Help
Despite the headlines, most insurers are genuinely working to support their customers. They invest in:

• Risk mitigation tools – Offering discounts for using telematics devices or smart home tech
• Fast claims handling – Digital claims systems speed up payments
• Education – Helping customers understand their policies, coverage gaps, and ways to reduce risk

At their best, insurers aren’t just policy providers—they’re partners in protection. They're there to help reduce financial loss, in the event you need to file a claim. 

Looking Ahead: What to Expect
The road ahead may include continued rate adjustments, more scrutiny on claims, and greater use of AI and data to assess risk. But it’s not all bad news. As insurers modernize, customers can expect:

• More personalized pricing
• Improved customer service through automation
• Better tools to understand and manage policies

The takeaway? Stay informed, stay proactive, and work with your insurer—not against them—to get the best value and protection.

Insurance isn’t just about checking a box—it’s about preparing for the unpredictable. The more you understand how the industry works, the better you can make smart and cost-effective choices. This helps protect what matters most.

Need a quick recap? Check out our video with all this and more!

Reach out to a Hastings Agent, today, to answer your questions, and quote your policies!