Why Insurance Costs Are Rising – And What You Can Do About It
If your latest home or auto insurance renewal took you by surprise, you’re not alone. Rates are rising—sometimes significantly—for policyholders nationwide. And the reasons go far beyond your personal claims history or driving record.
At BakerHopp Insurance Group, we believe insurance should never feel mysterious. In this blog post, we’ll break down the key factors driving premium increases in today’s personal insurance market and provide you with information on what you can do to stay protected and in control.
The Factors Driving Up Costs
Auto Insurance Costs
Auto insurance costs are rising for nearly all drivers, even those without a recent accident or traffic violation, which can lead to understandable confusion and frustration. Here’s why you may have seen your rates go up this renewal season:
- Cars are more expensive to repair and replace. The average car on the road today is packed with advanced technology. Sensors, cameras, smart windshields, electric components—it’s all designed to keep you safe, but it also means repairs aren’t as simple (or as cheap) as they used to be. A minor fender-bender can now result in thousands of dollars in repairs.
- More accidents, more claims. After quieter roads during the pandemic, driving is back—and so are accidents. Higher traffic volumes and more distracted drivers are resulting in more frequent and severe crashes. That means more claims and higher costs for insurers across the board.
- Inflation affects everything. Just like groceries and gas, the cost of auto repairs and rentals has increased. From labor shortages in repair shops to backlogged parts supply chains, insurers are paying more to settle claims, and those costs get passed along to policyholders.
Home Insurance Costs
Rising home insurance premiums can be especially jarring, particularly if you haven’t made any claims. But behind the scenes, insurers are facing significant increases in the cost of protecting your property.
- Construction and labor costs have risen. Whether you’re replacing a roof or rebuilding after a fire, the cost to put your home back together is higher than it was a year ago. Lumber prices have fluctuated wildly, contractors are booked out months in advance, and wages have risen across the trades. If it costs more to rebuild, it costs more to insure.
- Climate change is increasing the frequency of catastrophic weather events. From wildfires and hailstorms to hurricanes and heavy rainfall, natural disasters are occurring more often, and in places that haven’t historically experienced them. These widespread claims events put stress on the entire insurance market, not just those in disaster zones.
- Reinsurance costs are rising. Reinsurance is insurance for insurance companies, and these costs have increased dramatically as global catastrophes have grown. As carriers take on more risk, their own cost of doing business rises, and unfortunately, that impacts consumers as well.
The Impact on Michigan Residents
While these trends are national, as a Michigan-based company, we feel compelled to acknowledge that Michigan residents are experiencing very real local effects, particularly in auto insurance and storm-related home damage.
Auto Insurance: Even with the reforms from Michigan’s 2020 auto insurance overhaul, many drivers are seeing rate increases driven by nationwide factors. The cost of medical care for accident victims remains high, and supply chain slowdowns have made even routine repairs take longer and cost more.
Home Insurance: Whether you live in a city, a lakeshore community, or up north, rising home values and increasing storm activity (especially wind and hail) are influencing rates across the state. In some areas, we’re seeing premiums increase by as much as 15–20% annually, not because your home is riskier, but because everything around it is more expensive to repair or replace.
How BakerHopp Can Help
Insurance costs may be on the rise, but there are still smart and proactive steps you can take to protect your home, vehicle, and wallet.
Here’s how BakerHopp helps our clients stay ahead:
We advocate for you. As an independent agency, we’re not tied to one carrier. We’ll compare coverage across top-rated companies to find the best value for your unique needs, not just the lowest price.
We review your policy annually. Your life changes, and your coverage should keep up. We’ll help you assess whether you have the right limits, deductibles, and endorsements in place, ensuring you’re neither overpaying nor underinsured.
We find ways to save. From bundling your home and auto policies to evaluating safe driver and home safety discounts, we’ll help you unlock every savings opportunity available.
We’re here when you need us. Whether you’re filing a claim, updating your policy, or just have a question, we’re your partner, not a call center. Real people, real advice.
We know these market trends can be frustrating. But you don’t have to navigate them alone. If you’re concerned about rising premiums—or simply want to ensure your coverage remains the right fit—let’s connect. Reach out to us anytime.