You’ve been busy with life and work, and months have flown by like days. The seasons changed: fall gave way to a crisp CNY winter, and spring appeared like an old friend bearing a gift.
While you were caught up in the swift passage of time, you may have missed the arrival of your insurance policy renewal.
And sadly, it didn’t show up alone. It brought a friend … another rate increase!
In fact, Insurance rates have been on the rise for a while now, along with the increased cost of goods and services you’re used to.
As insurance agents with many clients, we are no strangers to annual inflation adjustments. It’s just never been quite like this. We can assure you we feel your pain. You are not alone.
In this article, we’ll unpack the reasons why inflation is causing your premiums to increase and why having the right coverage will ensure that every dollar you spend will provide adequate protection against future mishaps, accidents, and perils.
But first, we’ll explore why insurance shouldn’t be viewed as a product separate from the goods and services you’re accustomed to so you understand how inflation impacts it all.
The Overlooked Relationship Between Insurance and the Rising Cost of Living
When considering inflation, you probably think about the cost of groceries, gasoline, airline tickets, and other everyday items that fill your life. You’ve probably come to expect the prices of those items to rise and are even okay with it in some ways.
For many people, that expectation or acceptance doesn’t translate to insurance rates. For them, everything else is allowed to go up in price but not insurance.
As we all know, insurance is often a legal requirement. For that reason, people tend to see it as a hindrance. Not having it keeps them from obtaining the products they love, from cars and boats to a first home and a new business. And for others, having it is a needless expense and nothing more.
But tremendous value is wrapped up in the very thing we often cast aside as unnecessary. For one, enjoying many of the products you love is done at great risk.
Driving over a patch of black ice on Onondaga Lake Parkway or sitting in your living room during a sudden windstorm that downs trees and powerlines around you are situations that can end in a loss.
For that reason, having the right insurance coverage is paramount. But people find it difficult to see insurance as part of the things they use daily. A car is tied to insurance and shouldn’t be used without it. That would be like wearing boots without soles while hiking across jagged rocks or a rough trail.
Insurance is tied to the goods and services you’re accustomed to. But when those goods and services increase in price, what do you think will happen to insurance rates?
What Effect Does Inflation Have on Insurance?
Because insurance replaces the things you use, the value of those items affects the cost of your insurance premiums. Think about all the people working in the various industries that serve you.
If you have an accident and damage the car you bought, the mechanics who will service it all received a pay increase, which means the cost of labor goes up. The parts they have to order also saw a price hike, but if there’s a labor shortage or the parts on order are in short supply, prices spike even higher.
That body shop will send your insurer the bill to repair your vehicle. And you’re not alone. Many other people are filing auto claims during this wage and price increase while renting pricier vehicles at the insurer’s expense since the cost to rent a car has also gone up.
Rental periods have also extended because parts take longer to ship, and more complex cars with computers and chips require a higher skill level to repair.
To cover it all, the insurance company is left with no choice but to raise rates because of these inflated costs.
Then there are price increases in the housing market, like what we saw in 2021, with the cost of lumber and other materials soaring. Fire damage restoration experts cost more these days, as do the drywall installers, painters, flooring professionals, and other specialists who will cross your threshold to restore your home following a loss.
The medical portion of your insurance coverage also suffers from healthcare cost increases. Doctors are being paid more, and drugmakers have raised prices on pharmaceuticals beyond the rate of inflation.
Litigation arising from claims is also factored in, as increasing attorneys’ fees are passed on to the insurer.
Every single one of the people mentioned here—the mechanic, the attendant at the car rental company, the lawyer, the doctor, the painter, and the flooring expert—all have experienced inflation within their business. In turn, they have to charge higher fees for their services.
And it all affects your premium cost. But some people believe their insurance rates should be going down!
Knowing the cause of these rate increases is one thing, but paying more for something that doesn’t work is even more painful, especially when it comes to insurance.
What good is an insurance policy you’re paying hard-earned money for if that policy provides little value or protection? Paying for the wrong coverage leads to the pain and frustration policyholders experience time after time.
Protecting Your Future: Why Understanding Your Insurance Policy Matters
If you’ve ever encountered an accident or peril and, after filing a claim, weren’t adequately compensated, there’s a good chance your policy wasn’t written for you.
But that’s not your fault.
You might be ready to blame your insurer or the agent who sold you the policy, but they’re probably not to blame either. The problem lies with the insurance industry itself.
For far too long, you’ve purchased insurance without a proper understanding of your coverages because it is not common industry practice to educate you on the products you’re being sold.
The Horan agency aims to change that tradition. That’s why you’re reading this article.
With policy premiums on the rise, you need to feel comfortable with the insurance coverage you’re paying for. But how can you do that when you have little to no idea what you bought, or worse, if it will even help you when you need it most?
Our site is here to educate insurance consumers on their policies so that they can get the most out of their coverage knowing what they bought. And the right policy combinations can protect you against an assortment of possible threats. This leads to the ultimate peace of mind.
Now that you know how inflation is driving up insurance rates, you might be wondering if the insurance you purchased is enough to cover you against a future mishap, accident, or peril.
We have several articles on the site that explain different coverages and how they function. Whether you’re looking for info on auto, home, renters, or personal umbrella policies, we cover those subjects and more.
If you’d rather speak to a live agent, call (315) 635-2095 to discuss your policy with a Horan insurance specialist.
Looking to purchase a new policy? No problem. Click the Get a Quote button below to start the ball rolling. We’re looking forward to hearing from you.