Impact of Inflation on Insurance Rates
Inflation affects the cost of insurance in the same way it affects the cost of goods and services in an economy. While the relationship between inflation and insurance may attract a lot of attention, knowing how the cost of insurance changes is important.
Insurance companies usually consider several factors when determining insurance premiums. They look at industry trends such as the number of claims ad the cost of home or vehicle repair. An increase in those costs often signals an increase in the price of insurance premiums. Since inflation is a major driver of the cost of goods in an economy, it also increases the cost of insurance. Due to the cost of building materials going up, an increase in a labor shortage, or chip shortage due to inflation, insurance companies are also forced to ask for more premiums to cover the cost of a claim.
What Made Your Insurance Rate Increase this Year?
While inflation is a major contributor to the increasing cost of insurance, the insurance industry has been facing a range of challenges that may be causing your rates to go up:
- Increase in Housing and Labor Costs – The reduced availability of lumber and other construction materials in recent times has made the cost of building and repairing homes more expensive. During the same period, the cost of skilled labor increased, further pushing the cost of property insurance.
- Chip Shortage – Cars being manufactured today require a chip, but with chips not easily accessible, the cost of cars has risen. This has also increased the cost of repair in the event of an accident.
- Increase in Repair and Labor Costs – The chip shortage has seen many people keeping their old cars on the road for longer. This has caused more repairs and an increase in the demand for car parts and labor.
So, How Can You Lower Your Premiums?
With inflation causing insurance costs to spike, you may be wondering how best you can lower your premiums. Jeff Johnson Insurance Agency recommends a few options for lowering insurance costs during inflation:
#1 Save on Home Insurance through:
- Check for home insurance discounts that you qualify
- Explore payment options like paying for the year in full or automatic payments
- Bundle with auto insurance to save
- Increase deductible
- Get rewarded for being a safe homeowner by being claims-free for at least 5 years
#2 Save on Auto Insurance through:
- Check for any qualifying auto insurance discounts
- Explore options such as paying for the year in full or automatic payments
- Increase your deductible
- Participate in a safe driving program or maintain a good driving record
- Bundle with your home insurance for safe
Get Help from an Expert
While you cannot control inflation, you can reduce the impact it has on your premiums by taking certain measures. Jeff Johnson and Dan Mullenbach are ready to walk with you every step of the way. We offer some of the most competitive insurance packages and rates in Des Moines, Waukee, and all of central Iowa. Give us a call today at 515-987-6993 and let us help you navigate the rising cost of insurance. request a quote click here now.