Five Things That Are Spiking Your Insurance Premium
It's a drag, but just as your expenses keep rising, so does the cost of doing business as an insurance company. That means higher premiums.

Have you noticed your insurance premium increasing? You pay your bill every month, or every year, and if you’re keeping tabs on it, you will see that the premium you are paying is going in one direction — up.
Here are the five top reasons your insurance premium is going up — and will continue to do so.
1. Inflation
Yes, your bestie and mine, inflation. Inflation has a way of making things more expensive. That’s why when I was growing up, I could go see a movie for $2. Today, that movie costs me $20 or more.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
You know and love all the stories. Your parents say how a newspaper was a dime. Side note: If you don’t know what a newspaper is, you can Google it, or just imagine a blog printed on thin paper with ink that rubs off on whatever touches it.

Karl is an insurance agency owner, insurance expert witness in state, federal and criminal courts, and radio talk show host. For more than 30 years, Karl has helped consumers understand the complex world of insurance. He provides actionable advice and distills complex insurance concepts into understandable options. He appears regularly in the media, offering commentary and analysis of insurance industry news, and advises lawmakers on legislation, programs and policies.
Because of inflation, your dollars buy less today than they did yesterday and the day before that. Your insurance company also has to pay those higher dollars for the things it buys for you.
So yes, your premium will go up to cover the increased prices that your insurance company must pay to cover your losses.
2. Climate change
The changes in the climate are creating weather patterns that we have never seen before. They are leading to billions of dollars being paid out in insurance-related claims, which we also have never seen before.
This isn’t hyperbole — climate-related disasters are on the rise, and not a little bit and not for just a few years, but a lot and for a long time.
Your insurance company has to take into account the massive disasters that we are seeing more regularly now, and that means an increase in your premium.
3. Big verdicts
These days, people like to sue other people. Or other companies. Or just about anyone they can find to sue. Personal responsibility is a thing of the past, and if a scapegoat can be conceived of, then folks are out there looking for them.
In the past, these so-called frivolous lawsuits would be dismissed outright, or the plaintiffs would be paid a pittance to go away. Now, we are seeing juries handing out verdicts for massive amounts of money. We’re talking millions, sometimes tens of millions, or more.
A large part of these verdicts are being paid for out of insurance company proceeds, which means — you guessed it — when insurance claim amounts jump way up, the premiums to keep them funded will do just the same.
4. Today’s vehicles are computers
You are in the drive-through at Starbucks, waiting to nab your grande Iced Brown Sugar Oakmilk Shaken Espresso with extra cinnamon powder and light ice, and the driver behind you lets their boot off the brake and bumps you. Looks like a minor ding, but a message has popped up on your car’s screen about a camera being unavailable.
Fast-forward, and you find out your entire bumper needs to be replaced, because, you know, all that tech goodness is integrated. It will take four to six weeks for the part to come in, putting you in a rental car.
The new bumper is $4,600, and the technician who will install and calibrate it says it will take six to eight hours of labor to get it installed, set up and tested.
All in all, this is a $10,000-plus claim you just filed — after what seemed like a minor bump in the drive-through. Turns out, there are no longer so-called small fender benders. Most claims today mean serious buckies being paid out. Hence, your insurance premium goes up.
5. Reinsurance costs are increasing
Reinsurance is a funny thing. It is a way for an insurance company to spread the risk they are taking, allowing them to take on more risk and still maintaining access to enough money to pay your claim.
The thing is, it comes at a premium, literally. When your insurance company purchases reinsurance as a way to better ensure there is money when needed, it has to pay the reinsurer for the privilege.
Reinsurance costs have been climbing, and those costs trickle all the way down to your personal insurance premium.
Listen, I get it. We all want to pay as little as we can for our insurance premiums. We want just what we have to have — well, that is until we have a claim, then we want to have the best of the best. But I digress.
In the United States, insurance companies are for-profit companies, with shareholders and boards of directors, and are required to make a profit. When the cost to do business as an insurance company increases, the only way to maintain or reach profitability is to increase premiums.
What can you do about it? The best thing is to shop around, educate yourself on discounts and let competition work its way into the game to help keep the premiums we pay affordable.
Want to learn more about insurance? Visit KarlSusman.com.
Related Content
- Five Top Insurance Scams to Watch Out For
- Wait, Why Did My Insurance Premium Increase?!
- What Is Insurance Good For? Let Us Count the Ways
- Five Reasons You Might Hate Your Insurance Company (and Why You Shouldn't)
- Why Does One Claim Jack Up My Insurance After Years of No Claims?
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Karl Susman is an insurance agency owner, insurance expert witness in state, federal and criminal courts, and radio talk show host. For more than 30 years, Karl has helped consumers understand the complex world of insurance. He provides actionable advice and distills complex insurance concepts into understandable options. He appears regularly in the media, offering commentary and analysis of insurance industry news, and advises lawmakers on legislation, programs and policies.
-
What About Those ‘Guaranteed’ Life Insurance Ads?
Guaranteed life insurance policies can sound tempting if you've been declined for insurance elsewhere. Here are four downsides and one alternative.
-
13 Answers to Pressing Social Security Questions
From smart claiming strategies for couples to tips on maximizing your monthly check, we have advice that can help you.
-
What About Those ‘Guaranteed’ Life Insurance Ads?
Guaranteed life insurance policies can sound tempting if you've been declined for insurance elsewhere. Here are four downsides and one alternative.
-
Keep Tax Collectors at Bay with Muni Bond Funds
Municipal bonds can be good insurance against inflation — and interest is tax-free. But as with all investments, understanding risk is key.
-
Eight Tips From a Financial Caddie: How to Keep Your Retirement on the Fairway
Think of your financial adviser as a golf caddie — giving you the advice you need to nail the retirement course, avoiding financial bunkers and bogeys.
-
Just Sold Your Business? Avoid These Five Hasty Moves
If you've exited your business, financial advice is likely to be flooding in from all quarters. But wait until the dust settles before making any big moves.
-
Cord Cutting Could Help You Save Over $10,000 in 10 Years
How cutting the cord can save you money and how those savings can grow over time.
-
Should I Buy Stocks or Should I Buy Bonds Right Now?
Generally speaking, stocks provide reasonable growth while bonds provide stable income. Each play important roles in diversified portfolios.
-
You Were Planning to Retire This Year: Should You Go Ahead?
If the economic climate is making you doubt whether you should retire this year, these three questions will help you make up your mind.
-
Are You Owed Money Thanks to the SSFA? You Might Need to Do Something to Get It
The Social Security Fairness Act removed restrictions on benefits for people with government pensions. If you're one of them, don't leave money on the table. Here's how you can be proactive in claiming what you're due.