Rising inflation affects many areas of your life and is taking a toll on many people throughout the country who are feeling the impact. However, there is one thing that many people may have not considered, leading to this question. Has inflation impacted insurance costs? Unfortunately, yes, it has caused spikes in premium prices, as insurance companies base your coverage on repair and replacement costs. Reports indicate that auto insurance costs will likely continue to increase in 2023. Homeowners’ insurance prices are also affected.
Inflation and Its Impact on Auto Insurance
Higher inflation rates on consumer goods create general cost increases affecting automobile insurance prices in various ways. Inflation, supply chain problems, and lack of workforce cause manufacturers to charge more for car parts, increasing repair charges. Replacement expenses are also much higher, forcing insurance agencies to pay more for comparable cars.
Computer Chip Shortage
Computer chips are a vital component of today’s automobiles. Fewer available chips and other issues have created a low inventory of new cars. This lack of available motor vehicles impacts insurance premiums, as replacing your car after an accident has a higher price tag.
Rental Car Costs
The reduced auto inventory also results in higher-priced rental cars, meaning insurance companies have to pay more for a rental if your car needs repairs. You will likely also require an alternate vehicle for an extended timeframe due to the lack of available parts and cars.
Safe-Driving Programs
Since auto coverage costs are rising, people want to save money on premiums however they can. Many are turning to safe-driver policies to offset price increases. These policies reward drivers for safe driving practices. When you sign up for this type of coverage, the insurance company collects and monitors information about your driving habits and mileage for potential cost savings.
Using a telematics system, a mobile app, or a small auto-tracking device, insurance companies capture data to determine if you operate your vehicle safely. Good driving minimizes your risk factor and can reduce your premiums.
Inflation Affects Homeowners Insurance
High inflation is one of the primary causes of increases in home insurance premiums. Home insurance policies base their pricing on the expense of rebuilding your home.
Construction Materials and Labor Costs
Due to inflation, the cost of lumber and other housing materials has gone up. In addition, the cost of skilled labor in the construction industry has increased amidst a shortage of workers.
Increased raw material costs, disruption of available workforce, and supply chain issues have made it much more expensive to repair and construct a home. This price increase directly affects the cost of your insurance policies, as agencies must raise premiums to ensure your home has protection in the event of a loss.
Finding Affordable Auto Insurance
Inflation’s impact on insurance involves many factors. With costs continuing to rise, working with experienced, knowledgeable agents can help you find the best homeowners and auto insurance coverage.
About Brooks, Todd & McNeil
Since 1839, the independent agents at Brooks, Todd & McNeil have been pleased to offer our community the best and most affordable policies from a variety of providers. Our dedicated facilitators are ready to put their 75 years of combined experience to work on your claims. To learn more about our products and services, contact us today at (800) 448-4567.