Like most other goods and services, inflation can also increase the cost of insurance.
When determining insurance premiums, insurance companies look at a variety of factors including industry trends like number of claims and costs to repair vehicles and homes. If those costs increase, the price of insurance premiums will likely increase as well.
Unfortunately, due to inflation these costs are increasing. Building materials for homes are more expensive, there’s a chip shortage driving up the cost of cars, and there’s also a labor shortage. These factors mean the cost to repair your home and vehicle have increased in the event of an insurance claim.
- Housing material and labor costs have increased
Lumber and other construction materials have spiked in price due to less availability making the costs to repair and build homes more expensive. At the same time, we’ve also seen an increase in the cost of skilled labor and the construction industry is down about 200,000 skilled trade workers1. These factors have likely increased your property insurance costs. - The chip shortage
A crucial component of cars built today, fewer available chips results in more expensive cars, and as the cost of cars rise, so does the cost to repair if an accident occurs. - Auto repair and labor costs have increased
With the chip shortage, more people are keeping their old cars on the road longer, needing more repairs. The increased demand for car parts combined with supply chain issues, are leading to inflated car part costs. Auto repair shops are also experiencing staffing shortages and increased labor costs which are also driving up the costs of repairs.
If you believe your insurance premiums are increasing due to inflation, you may be wondering what company offers the best coverage for the best price that meets your insurance needs. As an independent agent, we can help. Feel free to contact us at any time.
1. https://hbi.org/wp-content/uploads/HBI-Construction-Labor-Market-Report4.pdf
2. Liberty Mutual
https://www.cnbc.com/2016/05/27/auto-insurance-rates-rising-at-fastest-rate-in-almost-13-years.html
