What is the Impact of Inflation on Insurance
Dan Levenson April 26, 2022
As Americans, we are constantly watching the prices of things go up. Though we are used to some prices going up, there are many things that are going up astronomically. You may not be worrying about much more than putting food in your home and gas in your car. However, your insurance is also going to be affected, as the prices continue to rise.
What is inflation?
The official definition of inflation is a loss of purchasing power over time. Basically, this means that the price of goods increases over time. It means that you will end up spending more money for your groceries and other goods that you buy on a regular basis.
Why is it happening now?
Inflation happens on a regular basis. However, it seems to be really increasing right now, due to the pandemic. This is due to the disruption of the supply chains. Once everything started opening back up in 2021, the demand for goods made the prices go up even more.
How does inflation affect insurance and the price of insurance?
You may be wondering what this means for you when it comes to your insurance and your needs.
It may come down to what the market value is on your home and other valuables. If you go by insurance values, you may not get enough money if something happens to it. You need to think about the market value of the object. Your home and automobile may be worth more now than when you first got it insured. You are going to want to check your plan to ensure that you will be paid properly if something happens.
You should work with an agent to get the best deal for your insurance. Your agent will be able to offer you several policies, explain why they are different, and help you figure out exactly what you need. He or she will be able to explain the difference between insurance and market value, to ensure that you feel happy with the plan that you choose.
It may help to talk to your agent about the inflation guard. They may have a clause in your insurance that will help to cover the increase in the cost of repairs, should your home, automobile, or valuables get damaged.
For this reason, many insurance companies recommend checking your policies regularly to ensure that you are fully protected. You should never get a policy and then forget about it for years. Instead, it is a good idea to check your policy at least once a year to make sure that you are protected. You don’t want to add on to your home, and then when you have a fire, realize that you never updated your policy. You will have to start all over (with your own money) in order to fix it.
As prices continue to rise, inflation continues to stress us out. We are spending more money than ever to fill up our gas tanks and put food in our bellies. Not only that, but everything else is getting higher too! However, we can’t forget about our insurance.
You need to check your policies at least once a year to ensure that you are fully protected. It may also help to work with an agent, to make sure that you get everything that you need (even if you didn’t realize that you needed it)!
If you are serious about getting the best deal for all of your insurance needs, don’t hesitate to contact us today. We would be glad to talk to you about what you need and how we can create a plan that is affordable for your budget.