Home, Auto Insurance Rates See Slight Increase In 2013

home insurance rates

Photo from Philip Taylor

Home and auto insurance rates saw a bump in overall costs for 2013, according to a new report from Perr & Knight’s RateWatch. The findings were revealed on Friday. While there were few decreases to be found, the rates were very modest, and fell within common averages.


Auto Insurance Stats

Personal auto insurance companies raised rates by a total of 2.5 percent in 2013. The figure is in keeping with a five-year trend of annual increases, noted IFAwebnews.com, adding that the annual average floats between 2 percent and 4 percent. It also came in lower than 2012’s increase of 3.7 percent.

While the bump was a very modest one (and at the low end of the usual average), some states weren’t so lucky. Michigan, for instance, posted a 8.6 percent increase in 2013, while Georgia upped the numbers by 5.2 percent. New York and Delaware both were among the top five highest increases with 4.3 percent hikes, and Nevada was just behind them with a 4.1 percent increase.

“No states experienced an overall reduction in rates between 2012 and 2013,” IFAwebnews stated, while noting that “2013 rates in North Dakota remained at 2012 levels overall.”


Insurance Stats For Homeowners

When it came to the average homeowner rates, Perr & Knight noticed a larger jump than with auto products, citing a countrywide increase of 5.1 percent for 2013. Renters rates rose by half of that at a rate of 2.6 percent. Condominium rates were slightly higher at 2.9 percent. All numbers were within the annual average over the last five years — 5 to 7 percent for homeowners, 2 to 4 percent for renters, and 2.5 to 6 percent for condominiums.

Customers saw the highest rate increases for home insurance in these five states:

  • Oklahoma — 12.1 percent
  • Florida — 11.0 percent
  • Kentucky — 10.9 percent
  • Kansas — 10.3 percent
  • North Carolina — 10.1 percent

“The only state experiencing a double digit increase in renters or condominium rates was North Carolina,” IFAwebnews reported. There, renters experienced a rate jump of 18.7 percent, around four to nine times the national average.

In California and Hawaii, however, there were overall decreases in homeowner insurance rates of -3.4 percent and -0.7 percent, respectively. Also in California, renters rates fell by -1.8 percent and condominium rates by -1.4 percent.


Methodology And Pricing Logic

“Overall, there were moderate rate increases for both auto and homeowners insurance in 2013,” said Tim Perr, Perr & Knight’s CEO. “Our RateWatch product provides visibility into these changes by accumulating the approved rate changes extracted from the public rate filings of companies representing about 80 percent of the personal insurance premiums written.”

Consulting the rate filings for oneself to determine pricing logic isn’t as hard for the average citizen as you might think. A state’s insurance department website will usually have these listed by month under “rate filings.” If your customers are wanting to know about increases and they’re having trouble finding the information, you can locate the link for them or help them Google it with a search of the state and the term “rate filings.”

Typically, insurance companies rate homes based on factors such as replacement costs, the city and/or county of residence, a customer’s claims history, their credit history, construction materials and local fire protection. As for auto insurance rates, they use a variety of factors to determine a policyholder’s likelihood of experiencing an accident or loss. Some factors include but are not limited to driving history; type of vehicle (including model, year and value); territory (where a vehicle is garaged and driven); number of accidents; age; gender; and credit scores.


In Summary

As the cost of business goes up and insurers plan for the projected losses ahead, rate increases are to be expected. Even so, Perr & Knight’s report shows that prices, for the most part, are moving at a slow and steady pace.

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