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Price hikes on tap for 2006
From homeowners' insurance to home heaters, the sum of your expenses is likely to grow.
December 8, 2005: 8:09 AM EST
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NEW YORK ( Unprecedented damage from natural disasters is a new addition to the list of reasons why a lot of critical and recurrent costs in your life will be going up next year.

The hikes in many instances will be multiples higher than the annual inflation rate, which at last reading was 2.1 percent, excluding the volatile categories of food and energy, or 4.3 percent, including them.

Not everything is set to rise, of course. Premium rates on life insurance, for instance, are expected to fall by 3 percent, according to the Insurance Information Institute. And after a 1.5 percent increase this year, auto insurance premiums are expected to remain flat in 2006.

Plus, you've just gotta think the price of that plasma TV you've been eyeing will be going down, like all prices do after a tech toy's 15 minutes of fame.

But maybe not enough to compensate you for price hikes in these four areas:

Homeowners' insurance: 10% to 35% more

Hurricane Katrina and an alphabet of other hurricanes wrecked havoc in the Southeast and on insurers' financial outlook.

So if you live in any coastal area or other hurricane-prone region, you're likely to see big increases in premiums.

No one is pinning a number yet on the average increase, but it may run anywhere between 10 percent and 35 percent. At least that's the range in which the American International Group expects to increase premiums in its reinsurance products, which insurers buy to protect themselves against risk. And it's expected that insurers will pass their extra costs along to customers.

Allstate, the largest publicly traded insurer and the one with greatest exposure to hurricane-prone states, is in arbitration to get permission to hike premiums in Florida by 18 percent on top of its 9 percent hike that regulators approved this summer.

Allstate's CEO has said publicly that the company is also seeking double-digit increases in premiums in Louisiana, Alabama, Virginia, Texas and other hurricane-prone states.

For more, click here.

Heating costs: 20% to 40% more

Warm temperatures stuck around longer than usual this fall, but not long enough to eliminate what are anticipated to be the biggest increases in heating costs in five years.

On average, if you use natural gas to heat your home, you can expect to spend $281 (or about 38 percent) more than you did last year, according to the latest data from the Energy Information Administration. If heating oil is what keeps you warm, you'll pay about $255 (or 21.3 percent) more, while propane-generated heat will run you $167 (or 15.2 percent) more on average.

If you use electric heat, you'll pay $46 (or 6.5 percent) more.

But, the EIA notes, what you eventually pay will depend on local weather conditions, the size and efficiency of your home and heating equipment, not to mention who wins the thermostat wars at night.

For estimates on heating cost increases for each region, click here.

Health insurance: 5% to 10% more (but less service)

After four consecutive years of double-digit percentage increases, healthcare premiums in employer-sponsored health plans grew 9.2 percent this year, according to Kaiser Foundation.

Today, an employee's average cost in annual premiums for family coverage is $10,880, while employees opting for single coverage pay $4,024.

More than 40 percent of large firms told Kaiser they are "very likely" to ask workers to pay more in premiums next year, but only 15 percent of smaller firms said they would.

Eight percent of firms said they are "very likely" to raise deductibles, while only 7 percent said they would likely raise co-payments for office visits or prescription drugs.

In another survey of employer-sponsored health plans, Mercer Human Resource Consulting found that employers anticipate a 6.7 percent average increase in health benefit costs.

Part of the reason why healthcare cost hikes are projected to be under 10 percent, the survey found, was because more employers have been cost-shifting. That is, employees who use their plans the most will pay the most because more plans are requiring a deductible be paid for in-network care and the median deductible has been going up. This year it rose to $300 from $250.

College costs: 5% to 10% more

Not that you should gamble away your hard-earned savings, but you'd have an excellent chance of winning the wager if you bet college costs will go up next year.

In fact, there's $10 with your name on it if you can recall the last year private college costs didn't increase more than inflation.

Growth in tuition costs slowed somewhat in the 2005-06 year, according to the College Board, but it still handily topped normal price growth. Average tuition at four-year private colleges rose 5.9 percent to $21, 235. Throw in room and board and you're looking at a bill of $29,026.

The increase was steeper at four-year public institutions. Average tuition rose 7.1 percent to $5,491, but that was considerably less than the 10.5 percent jump the year before. With room and board the cost of State U. this year would run you an average of $12,127.

There are no official projections for the 2006-07 year, but Sandy Baum, an author of the College Board's annual "Trends in College Pricing" report, said it's a fair bet they'll go up next year and that she'd be surprised if there was more than a one- or two- percentage-point differential from the increases this year.

For more on the rising costs of higher education, click here.  Top of page

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