How Inflation Impacts Insurance
We've all been feeling the pinch lately - higher grocery bills, gas prices going up and down, car prices soaring, and on and on.
What many forget is that the current inflation also impacts your insurance coverage. Compared to even a year ago, the labor, materials and overall cost to replace your home or vehicle have increased dramatically.
Our friends at Selective Insurance recently shared some tips to minimize the financial impact of inflation.
Contact McPherson & Newland Insurance at (908) 782-3710 and allow us to put some of these tips into action which can help you save!
How Inflation Impacts Premiums
Source: Selective Insurance
According to the U.S. Bureau of Labor Statistics, inflation recently hit 9.1%, the highest in 40 years*. Consumers and businesses feel the impact as prices soar for just about everything.
Inflation Impacts Insurance Rates
As inflation increases the cost of labor and materials like lumber, roofing, and auto parts, insurance claims costs also rise. Insurance companies raise rates to cover these higher costs, resulting in higher homeowners and auto premiums.
Homeowners insurance premiums are based upon the home's replacement cost, so as it increases, homeowners premiums also increase. It's important to increase the replacement cost value of your home to keep pace with inflation. Failing to do so can result in insufficient coverage levels in the event of a total loss.
Tips to Minimize Financial Impact
As we face these inflationary pressures, strategies that may help you save money on insurance premiums and associated costs include:
Consider whether you should increase your deductible; out-of-pocket costs are higher in the event of a claim, but annual premiums are lower.
Bundle all of your policies with one carrier to take advantage of the discounts that may be available.
Ask your agent about payment options. Monthly plans may incur fees, so paying in full could help you save money.