Since 2020, both homeowners and auto insurance premiums have climbed sharply across the United States – including notable hikes for Tennessee residents. Below we detail how much rates have risen on average in Tennessee vs. nationwide, followed by an analysis of the main factors driving these increases.
Homeowners insurance costs have surged significantly in recent years. Nationally, the average premium jumped from around $1,272 in 2019 to roughly $2,270–$2,510 by 2023-24, an increase on the order of 78%–97% compared to pre-pandemic levels. This far outpaces general inflation. In fact, homeowners nationwide saw about a 20% cumulative increase from 2020–2022, plus another ~6% in 2023 alone (States Where Home Insurance Costs Are Surging Highest).
Tennessee: Tennessee has not been spared these trends. While exact cumulative figures for TN are hard to pin down, the state is considered one of the costliest for home insurance. The average annual premium in TN is about $2,532 for a $250,000 dwelling policy, which is ~88% higher than the U.S. average for that coverage amount. Many Tennessee homeowners have felt double-digit jumps; for example, one Nashville-area homeowner reported a 27% year-over-year premium increase despite no claims (The Big Move - MarketWatch). Frequent severe storms and hail in recent years have contributed to rising Tennessee premiums, as insurers face higher claim payouts in the state.
Nationwide: Across the U.S., home insurance premiums have been on a steep upward trajectory. On average, premiums are roughly 78% higher now than before COVID-19 (e.g. ~$2,270 in 2023 vs $1,272 in 2019). Some states have seen especially extreme increases due to catastrophe exposure. For instance, Florida’s average premium is about $5,531 – 144% above the U.S. average – and Nebraska’s is $5,655 (149% above average).These eye-popping costs reflect the impact of hurricanes (in Florida) and hail/tornado storms (in states like Nebraska), on top of inflation. Even in more temperate areas, homeowners are facing rate hikes: home insurance costs rose ~21% on average during the 12-month period ending May 2023 (Sticker shock - Insurance News | InsuranceNewsNet), due in part to a spike in catastrophic weather losses and rebuilding costs.
Auto insurance has also seen steep rate inflation since the pandemic. After initial pandemic discounts (many insurers gave refunds in 2020), rates rebounded sharply as driving patterns normalized and claim costs soared. Nationally, the average annual auto premium rose from about $1,470 in 2019 to $2,329 in 2023, roughly a 58% increase. According to the U.S. Bureau of Labor Statistics, motor vehicle insurance costs were 75% higher in mid-2024 than they were in early 2020 (versus ~23% general inflation in that span). In just one recent year, auto insurance spiked ~19.5% (July 2022 to July 2023) – the largest one-year jump on record. This rapid climb has strained household budgets nationwide.
Tennessee: Auto insurance premiums in Tennessee have risen more moderately than the national average, but still markedly higher than pre-pandemic levels. Since 2019, the average auto policy in TN is estimated to be about 33% more expensive. (For context, states like Washington and Maryland saw 50%+ jumps in the same period. Tennessee’s increases reflect factors like higher accident rates and repair costs, though the state’s regulatory environment and competitive market have kept hikes somewhat in check relative to harder-hit states. Tennessee drivers are nonetheless seeing annual premium increases and should budget for higher costs going forward.
Nationwide: The typical U.S. driver’s insurance costs are roughly 58% higher than in 2019. The post-pandemic surge has been striking: the CPI for auto insurance is up about 47% from end-of-2019 through mid-2024, nearly double the overall inflation rate over that time. Some regions experienced even larger spikes – e.g. Washington state premiums jumped 54%, Maryland 42%, Delaware 44% in recent years. The trend began in 2021 as Americans returned to the roads, leading to more accidents (often severe) and has continued as claim costs (parts, labor, medical, legal) keep climbing. As of early 2024, auto insurance was up ~21% year-over-year nationally, and while rate increases may start to moderate, experts project continued upward pressure into 2025.
Multiple compounding factors are driving these home and auto insurance rate increases. The COVID-19 pandemic and its aftermath set the stage – disrupting supply chains, altering driving behaviors, and fueling inflation – but other longer-term trends are also at play. Major drivers include:
Broad-based inflation since 2020 has raised the cost of almost everything, and insurance is no exception. Insurers must charge higher premiums to keep up with the rising price of the goods and services they pay for in claims. Overall U.S. prices are up about 23% since the pandemic began, but insurance costs have risen even faster. Notably, auto insurance experienced roughly 75% inflation from 2020 to mid-2024, far outpacing the general CPI. Home construction costs and property values have also inflated, meaning claims for rebuilding a house are much pricier now than a few years ago. For example, it costs about $36,000 more to rebuild the same home today than a few years ago. This general inflationary environment forces insurers to raise rates just to cover the higher payouts for cars totaled or homes damaged in 2023 versus those in 2019.
In addition, insurance-specific inflation (sometimes called “social inflation”) has contributed. This term encompasses factors like larger jury awards, higher medical costs, and evolving legal standards that drive claim payouts beyond baseline economic inflation. While harder to quantify, insurers cite this as another reason why insurance loss costs have been rising faster than core inflation in recent years.
The cost to repair vehicles and homes has skyrocketed, which directly feeds into premium increases. During the pandemic, supply shortages and higher material costs made repairs more expensive, and those costs have not fully abated. According to industry data, replacement costs for materials and parts jumped ~55% during the post-COVID inflation wave, roughly four times the general inflation rate.
Automobiles: Today’s vehicles are loaded with technology – from advanced driver-assistance systems to expensive sensors – making them costlier to fix after an accident. The average new car price is now around $48,700 (up 32% since 2019), and used cars average $25,200 (up 27%). With vehicles themselves more valuable and complex, claim payouts for collisions have risen. Replacement parts (bumpers, windshields, electronics) carry higher price tags, and skilled mechanic labor is pricier. All of this means an insurer pays much more to restore a car to pre-accident condition than a few years ago, driving premiums higher.
Homes: Building materials like lumber, roofing, and copper plumbing saw huge price increases during 2021–2022. Construction costs rose ~40% in the last four years according to Consumer Reports. Even though some material costs have stabilized, they remain elevated. If a house burns down or is severely damaged by a storm, the claim to rebuild it can easily run into hundreds of thousands of dollars, significantly higher than before. Insurers have to adjust premiums to account for these higher potential claim severities. Many policies include an “inflation guard” that automatically boosts your dwelling coverage limit each year – which is helpful to keep coverage adequate, but it also means yearly premium upticks as coverage limits (and thus premiums) rise with construction inflation.
In short, more expensive cars and homes = more expensive insurance. When claim costs increase (whether due to pricier parts or labor), insurance companies eventually pass those costs back to consumers through rate hikes.
Catastrophic weather events have grown in frequency and severity, leading to a surge in insured losses – a major driver of property insurance rate hikes and even affecting auto insurance in some cases. The past few years have seen record-breaking storms, wildfires, hail, and flooding across the U.S., and insurers have paid out billions in disaster claims.
The U.S. has experienced 121 weather disasters causing $1 billion+ in damage each from 2019 through 2023, totaling an estimated $667 billion in losses. Insurers ultimately recoup these costs by charging higher premiums across the board. In 2022 alone, weather disasters cost U.S. insurers $93 billion in claims – part of a multi-year trend of elevated catastrophe losses.
Homeowners Insurance: Areas prone to hurricanes, tornadoes, wildfires, or hail have seen some of the steepest premium escalations. States like Florida, Louisiana, Texas, Oklahoma, Colorado, and California have been hit by repetitive disasters (hurricanes on the coasts, wildfire and hail in the West, tornadoes in the Plains). Insurers in these regions have raised rates significantly or even pulled back from offering coverage. For example, Louisiana homeowners face a projected 23% jump in premiums for 2024 after back-to-back bad hurricane seasons. Even Tennessee, while not coastal, has suffered severe storms and tornado outbreaks in recent years. Widespread hail damage and windstorms across Tennessee have led to huge insurer payouts for roof replacements and repairs, which in turn push premiums higher for everyone in the state.
Auto Insurance: Weather affects auto insurers too – for instance, flooding can total vehicles and hailstorms can dent hundreds of cars in a city within minutes. Comprehensive auto insurance claims (for non-collision damage like natural perils) have risen with the uptick in extreme weather. Thus, drivers even in non-coastal states may see rate increases partly due to costly weather events. Insurers note that “there’s no place to hide” from these costs – even if your area itself isn’t hit by a disaster, you may still feel it in your wallet through nationally higher insurance rates.
Climate change is a common thread cited in these trends. Warmer ocean waters and shifting weather patterns are fueling more intense hurricanes, plus more unpredictable storms (such as freak winter freezes or heavier hail). More losses = higher premiums. As one industry expert summarized, “We are seeing more storms that are major loss events... The increasing financial price tags of tornadoes and hail storms” are contributing to insurers’ need to raise rates. Actuarily, insurers must collect enough premiums to cover the expected future claims, and with Mother Nature dealing out costly surprises each year, those expectations (and required premiums) have jumped.
The legal environment surrounding insurance claims has grown more challenging for insurers, which ultimately affects rates. This includes the prevalence of lawsuits, the size of jury verdicts or settlements (“nuclear verdicts”), and state-level legal statutes that can either rein in or encourage litigation. Higher litigation costs = higher claim costs, often termed part of “social inflation,” and insurers pass some of this on to policyholders.
Auto Insurance and Liability Claims: The frequency of lawsuits from car accidents has increased, and attorneys specializing in personal injury are securing larger payouts for claimants. The insurance industry points to “legal system abuse” – such as exaggerated injury claims or opportunistic lawsuits – as a factor driving up auto insurance losses. Certain states (e.g. Florida prior to recent legal reforms) became known for outsized lawsuit activity in both auto and homeowner claims, which drove insurers to hike rates or even withdraw from those markets. Nationally, liability claim costs have trended up, reflecting not just more accidents but more costly settlements. In fact, the American Property Casualty Insurance Association noted that litigation and claims handling costs were a significant contributor to the recent spike in auto insurance inflation.
Homeowners Insurance and Assignment of Benefits: In property insurance, some trends like assignment of benefits (AOB) abuse (where contractors sue insurers directly, sometimes inflating repair bills) have been an issue in states like Florida and Louisiana. While Tennessee has not seen a crisis on the scale of Florida’s, the general increase in lawsuit prevalence and large awards affects insurers’ nationwide reinsurance and legal expenses. The insurance industry has lobbied for tort reform in various states, blaming plaintiff attorneys for driving a “high tide” of litigation that ultimately ends up reflected in premiums.
“Nuclear” Verdicts: The term refers to extremely high jury awards in accident cases. Over the past decade, the number of verdicts over $10 million has grown. This raises the expected cost of the worst-case claims, forcing insurers to build more into rates to cover those potential payouts. It particularly impacts commercial auto and umbrella liability lines, but personal auto policies are not immune to the ripple effect (through higher reinsurance costs, etc.).
In summary, rising legal costs and more litigious claiming behavior have added a layer of expense for insurers. One measure of this is “loss adjustment expense,” which has risen alongside payouts. Insurers cite this as a reason premiums need to go up, especially for auto liability coverage. Efforts to curb lawsuit abuse (for instance, recent legal reforms in Florida) may help temper this factor, but any such changes take time to reflect in rates.
Fraudulent and dishonest claims also put upward pressure on premiums. When some people game the system (through staged accidents, inflated repair bills, or false theft/vandalism claims), the costs get shared by all policyholders. While the vast majority of claims are legitimate, even a small uptick in fraud can have a notable financial impact due to the high costs involved per incident.
Auto Insurance Fraud: Some states have seen an increase in staged auto accidents and fraudulent injury claims (e.g., fake whiplash injuries or exaggerated medical treatment following minor crashes). Post-pandemic, reports of risky driving and even intentional collisions for insurance gains have emerged. In addition, organized rings have exploited insurer payouts for things like windshield replacements or minor fender-benders by systematically filing bogus claims. These schemes force insurers to spend on investigations and often pay out settlements, which ultimately drives premiums higher in affected regions. Tennessee has had issues with staged accidents in the past, though not to the extent of states like Florida or New York. Still, insurers nationwide bake in a “fraud load” to premiums – essentially anticipating that a certain percentage of claims involve fraud or abuse and pricing accordingly.
Vehicle Thefts: Auto thefts have soared to record levels, contributing to rising comprehensive insurance costs. Over 1 million vehicles were stolen in 2023, up from about 794,000 in 2019 (a 29% jump in thefts). In Tennessee, cities like Memphis and Nashville have seen sharp increases in auto theft (including a wave of Kia/Hyundai thefts in recent years due to an exploit). Stolen vehicles result in big insurance losses – either the cost of replacing the car if not recovered, or expensive repairs if recovered damaged. The NICB (National Insurance Crime Bureau) noted theft rates in some states jumped over 30–50% during 2020–2022. This crime trend directly feeds into higher premiums for comprehensive and even collision coverage (since stolen cars often get wrecked). Insurers now factor in higher theft risk, especially for certain models, when setting rates.
Homeowner Fraud: Property insurance fraud can include staged losses or contractor fraud – for example, a homeowner conspiring with a contractor to fake hail damage to get a “free” new roof from the insurer. There have been instances of hail fraud rings (contractors going door-to-door after a storm, sometimes even creating damage). The NICB has documented cases of hail damage fraud in Tennessee, where frequent storms unfortunately create more opportunity for such scams. Additionally, insurance arson (intentionally setting fire to a home or vehicle for payout) is an ever-present concern for insurers. While relatively rare, these incidents do happen and can cause losses in the hundreds of thousands of dollars.
Overall, the rise in fraud and theft adds to claim frequency and severity. Even honest policyholders end up paying a price. As one industry source put it, “Car thefts and insurance fraud also contribute to how auto insurance premiums are priced.” Every dollar paid on a fraudulent claim is a dollar insurer seeking to recover via premiums from customers. Combating fraud is part of insurers’ rate justifications when filing for increases.
Global supply chain issues and labor market trends since 2020 have had a pronounced effect on insurance costs by making repairs slower and more expensive. When critical parts or materials are back-ordered or skilled labor is in short supply, claim costs and downtime costs (like rental car days or additional living expenses for displaced homeowners) mount up.
Auto Parts Shortages: The pandemic snarled supply chains for auto parts – everything from computer chips to replacement body panels. Even now, certain car parts can take weeks or months to arrive. This delay means higher costs (rush shipping, warehousing, etc.) and often insurers must pay for a rental car for longer while the client’s vehicle is in the shop. Parts scarcity also drove prices up; for instance, the cost of an average OEM auto part is significantly higher than pre-2020 due to raw material and transportation cost increases. These factors have been gradually improving, but not before contributing to the need for premium hikes. An actuarial analysis noted that supply chain interruptions and a lack of specialized auto repair personnel contributed heavily to insurers’ $40 billion in personal auto losses in 2021–2022.
Building Materials and Contractor Delays: Similarly, for home insurance, the supply chain for building materials (lumber, drywall, shingles, etc.) experienced disruptions and price volatility. Lumber prices, for example, spiked to multiples of their normal levels in 2021, raising the cost of repairing a house after a loss. Even as lumber has normalized, other materials like drywall and electrical components have seen intermittent shortages. Moreover, labor shortages in construction trades mean higher wages to secure a contractor promptly. Insurers point out that worker shortages in construction and repair have resulted in higher labor costs, adding upward pressure on claim costs and premiums. If an insurer has to pay contractors “overtime” or surge pricing to repair dozens of homes after a storm, those extra costs feed into rates later.
Longer Repair Times: A hidden cost of supply chain issues is longer claim resolution times. For auto claims, what might have been a 5-day repair can turn into a 30-day wait for parts, during which the insurer pays for a rental car. For home claims, delays in getting materials or contractors mean families may stay in temporary housing longer (covered by ALE – additional living expense – coverage). These extended timelines made claims much more expensive on average. In 2021–2022, auto insurers saw elevated loss ratios partly because rental car days per claim went up. Home insurers similarly paid more ALE in cat events due to rebuilds taking longer. All of that is factored into future premiums.
In essence, the pandemic-induced supply chain mess and tight labor market injected extra costs into the insurance value chain. Even as some supply issues have eased, many insurers are still catching up financially from that shock. The 55% spike in parts/materials costs post-COVID mentioned earlier is a concrete metric of how severe it was. While inflation is the broad concept, supply chain disruptions explain why some prices jumped so drastically beyond normal trends.
In Summary: Tennessee residents – like those across the country – have seen substantial home and auto insurance rate increases since the pandemic, driven by a confluence of factors. Inflation (both general and claims-specific) has raised the baseline for costs. Repair and replacement expenses for cars and homes are up dramatically, forcing premiums up. An onslaught of natural disasters has led to heavier insured losses, especially in high-risk regions, and those costs ripple into premiums nationwide. Legal system pressures and high litigation costs have added to insurers’ payouts (especially in auto liability), and fraudulent claims and theft upticks have further strained the system. Meanwhile, supply chain and labor issues made everything from car parts to construction labor more expensive and slower to obtain, inflating claim costs.
All of these factors create a “perfect storm” financially, and insurers have responded with rate increases to maintain solvency and profitability. Industry data confirms the trend: homeowners premiums up roughly 30–40%+ over just the past few years in many states, and auto insurance up ~15–20% in 2023 alone. While some relief may come as supply chains normalize and new laws curb the worst litigation abuses, climate risks and economic pressures persist, meaning insurance costs are likely to remain elevated. Tennessee policyholders should compare rates and consider mitigation steps (e.g. bundling policies, increasing deductibles, fortifying homes against storms) to navigate this challenging insurance market.
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