How Inflation Factors are Impacting Your Insurance Prices

 With current inflation rates at near-40-year highs, prices are higher – in some instances, a lot higher – than they were just a few years ago. Because consumer goods are more expensive, it costs more to repair or replace those goods, driving up the price of claims and, therefore, the price of your insurance. 

For example, here’s a quick glance at current inflation factors affecting the price of your Homeowner’s Insurance:

•  There has been a 36% increase in building material prices since May 2021 to May 2022.¹
• 90% of builders reported a shortage of appliances, framing lumber, and engineered wood as of June 2021.²
• It takes 8 months or longer to build a new home in 2022 compared to 4 to 6 ½ months before the pandemic.³
• There has been a reported 14% increase in average monthly rent from June 2021 to June 2022, which impacts the cost of additional living expenses.⁴

Likewise, you might have noticed that the price of your Auto Insurance has also risen. Here are some inflation factors making an impact:

• From 2019 to 2021, the average price of a new car has increased by 25% and 41% for used cars due to supply chain shortages.⁵
• A 15% increase in the length of car rentals due to extended repair times in 2021 compared to 2019.⁶
• It has been reported that there are 10% more U.S. traffic fatalities per year since 2020 (as of June 2021), with distracted driving and excessive speeding on the rise from pre-pandemic times.⁷
• 20-year high in costs associated with physical damage insurance claims to vehicles during Q4 2021 and Q1/Q2 2022.⁸

In this climate, it is essential that you make sure you have the right coverage. Contact your insurance agent or broker to review your policy and make sure you have the right insurance for your particular circumstances. 

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SOURCES:

1. Producer Price Index Report
2. National Association of Home Builders
3. USA Today
4. Refin
5. Kelly Blue Book
6. Chubb Data
7. National Highway Traffic Safety Administration, Axios
8. Insurance Information Institute

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