Six tactics to reduce increasing auto and property insurance premiums.

• Nearly 20% increase in homeowners insurance annual rate occurred between 2021 and 2023, as per Insurify's data.
• According to the Bureau of Labor Statistics, auto insurance premiums increased by 16.5% in the past year.
• Experts advise that it is prudent to compare insurance options annually instead of sticking with the same provider.

Insurance costs are significantly increasing, despite a decrease in overall inflation, and are putting a strain on many household budgets.

Between 2021 and 2023, the average annual rate for homeowners insurance increased by nearly 20%. In 2024, homeowners can expect another 6% increase, bringing the average policy cost to $2,522 by the end of the year, according to Insurify, a virtual insurance agent.

Car insurance premiums have also shot up.

The average cost of car insurance increased by 16.5% from August 2023 to August 2024, according to the Bureau of Labor Statistics. Bankrate predicts that in September, the average cost for full coverage car insurance will be $2,348 per year.

Home insurance rates are rising due to several factors, including higher costs for building materials and repairs, an increase in litigation related to claims, and a greater frequency of weather-related events, according to Shannon Martin, a licensed insurance agent and writer for Bankrate.

Car insurance rates have increased due to extreme weather events, higher replacement and repair costs, and increased medical expenses after accidents, according to experts.

Here are six strategies to consider for reducing rising premiums.

1. Shop around for a new insurer

Experts advise that it's prudent to switch to a different car or home insurer annually.

A recent survey by Autoinsurance.com found that 37% of drivers have or plan to receive a quote from a new insurer due to rising insurance rates, while 27% have or intend to switch insurance companies.

Experts advise shopping for car and home insurance annually to ensure competitive rates, and comparing rates if a life change occurs that may affect your rate.

Shopping around for insurance is a good idea when making significant life changes such as moving, getting married, or buying a new car, according to Maya Afilalo, an insurance analyst at Autoinsurance.com.

Despite the negative effects of extreme weather events on insurers, companies are at varying stages of adjustment.

"An insurance agent advised that a company with a higher rate could be more beneficial than one in recovery, and shopping could lead to significant savings."

To compare costs, you can obtain quotes from multiple insurers by either going online or using apps for insurance marketplaces. Alternatively, you may want to speak with an independent insurance agent, who usually gets a commission from the insurer for selling policies, and can be found through the Independent Insurance Agents and Brokers of America.

In addition to lower premiums, it's important to evaluate insurers' financial strength and reliability, as rated by AM Best and Demotech.

According to insurance agent David Carothers, a principal at Florida Risk Partners in Valrico, Florida, the financial strength of the carrier is crucial in determining their ability to pay future claims, as well as understanding their past history of paying claims.

2. Increase your deductible

Increasing your deductible can reduce your car and home insurance premiums.

Loretta Worters, a vice president at the Insurance Information Institute, stated that raising your deductible from $500 to $1,000 can lower optional collision and coverage premiums by 15% to 20%.

If you increase your deductible, you must have enough money in an emergency fund to cover it.

3. Adjust your coverage

Experts suggest updating your insurance coverage to reflect any changes you've made to your home, such as a new roof, hurricane-impact windows or a security system, in order to save money.

Reducing coverage on certain items, such as jewelry or artwork, could potentially lower your homeowners insurance premium.

Dropping collision coverage on older cars can help reduce expenses. However, if your car's value is less than 10 times the premium, you may want to consider dropping coverage, which means you'll be responsible for paying for any damages out of pocket in the event of an accident or noncollision damage.

Rod Griffin, a senior director at Experian, stated that you may be liable for damages to uninsured property, which comes with some level of risk and reward.

Experts advise that having adequate insurance and the appropriate coverage can help you save money in the long run. However, not having the necessary insurance, such as flood insurance, could result in higher premiums in the future.

According to the Federal Emergency Management Agency, just an inch of water can cause approximately $25,000 in damage to a property. However, most homeowners insurance policies exclude flood damage, and only about 30% of U.S. homes in high-risk areas for flooding have flood insurance, according to the University of Pennsylvania's Wharton Risk Center.

Experts advise that having flood insurance is necessary, even if you reside in a low-risk flood zone.

According to Carothers of Florida Risk Partners, many people do not purchase flood insurance because their bank does not require it, and they are not in a flood zone, as per a map. However, when a hurricane strikes, a storm surge occurs, and there are numerous uncovered claims.

4. Look for potential discounts

Experts advise that while bundling coverage may seem like a good deal, it's not always the best option. It's worth considering other insurance companies to see if they offer better rates.

Martin from Bankrate advised that it's beneficial to examine both options - bundling and not bundling - and to consult with your agent prior to making significant changes to your home or costly modifications that you believe will save you money.

Homeowners can receive discounts if they maintain a claim-free record or enhance their home's safety features.

Discounts for car insurance include safe driver, good student, defensive driving course, older drivers, and low mileage.

5. Keep up your credit score

Experts suggest that a higher credit rating can result in lower auto and home insurance rates in states where credit is a factor for insurance companies.

Drivers with poor credit pay significantly more for full coverage insurance, with an annual cost of $4,349 compared to $2,033 for those with excellent credit, according to a Bankrate report.

6. Price out insurance costs ahead of time

Considering insurance costs in your initial budget can prevent unexpected expenses and make it easier to adjust your budget later.

When purchasing a home, it's crucial to consider the potential for extreme weather, which may limit your insurance options and increase premiums. Websites such as First Street and Climate Check can provide projections of the impact of extreme weather events on your home through 2050.

Martin stated that by consistently positioning oneself in a stronger place, one can effectively price out insurance before becoming emotionally and financially invested.

— CNBC producer Stephanie Dhue contributed to this story.

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