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  • Writer's picturePaul Fulmer

How does inflation impact the cost of insurance?

Updated: Jan 19, 2023

Inflation and Insurance

The insurance industry consider a number of variables when calculating insurance premiums, including market trends like the volume of claims and the cost to repair homes and cars. The cost of insurance premiums will probably increase if those prices rise.

Sadly, these prices are rising as a result of inflation. The cost of housing construction materials has increased, the price of automobiles has increased because to chip scarcity, and there is a labor shortage as well. These elements result in higher repair costs for your house and car in the event of an insurance claim.

Why did the cost of your insurance increase this year?

1. Labor and material prices for housing have grown.

Due to a shortage, the price of lumber and other construction supplies has increased, increasing the expense of home construction and repair. In addition, the cost of skilled labor has increased, and the number of skilled trade employees in the construction sector has decreased by around 200,0001. Your property insurance costs have probably gone up as a result of these variables.

2. The insufficiency of chips.

Less supply of today's automobiles' essential chips leads to more expensive cars, and as car prices rise, so do repair costs in the event of an accident.

3. Costs for labor and auto repairs have gone up.

Due to the chip shortage, more individuals are using their aging vehicles longer and requiring more maintenance. Costs for car parts are rising as a result of a combination of rising demand and supply chain concerns. The cost of repairs is rising as a result of staffing shortages and rising labor rates in auto repair businesses.

How can I reduce the cost of my insurance?

Home Insurance:

  • Check for any home insurance discounts you could be eligible for to reduce the cost of your policy.

  • Remain claims-free for five or more years to reap the benefits of being a responsible homeowner.

  • Look into your payment alternatives, such as automatic installments or paying the entire year at once.

  • Shoot up your deductible amount

  • Bundle home and auto insurance to save money.

Auto Insurance:

  • Check to see if you qualify for any auto insurance savings.

  • Keep a clean driving record or take part in a RightTrack-style program to promote safe driving.

  • Explore your payment alternatives, such as setting up automatic installments or paying everything upfront.

  • Shoot up your deductible amount.

  • Save money by combining it with your house insurance.

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