Is Inflation Affecting My Insurance Rate?
The price of auto parts caused vehicle repair costs to increase. Generally, car parts are a stable commodity with just 3% in annual increases from 2017 to 2020. Last year, there was a 10% increase followed by a 12% increase for the first half of 2022 (Producer Price Index).
Homeowners are also experiencing inflation pressures. New home construction pricing is up 17% from January to August of this year, bringing the total increase from the start of the pandemic to 35% (Consumer Price Index). Looking at individual commodities it’s not hard to see why construction costs are so high. The price of lumber more than doubled during the pandemic and despite recent decreases, pricing is still up 50% from March of 2020.
Business owners are also seeing an increase in their rates due to inflation. The same increase in home construction costs applies to insuring brick-and-mortar stores. Expensive machinery and other tools are also more costly to replace which impacts the premium to have them properly insured.
Large rate increases are never easy to handle, especially with inflation driving all costs up across the economy. Insurance companies consider both inflationary trends and their historical performance when making a rate change, and they do not take lightly the impact this has on you.
The bad news: Costs are going up during this economic cycle. While the temptation may be to reduce coverages to save a buck, this only puts you at more risk in case of a claim.
The good news: An independent insurance agency like Roland, Abbott, & DeZoort can shop your specific needs with multiple companies to find the best package to protect what you value most! 2023 does not have to be a gloomy year. Let our specialists get to know your unique situation so we can help you find the right coverage at the right price.