How Inflation Can Impact the Cost of Your Insurance 

Inflation doesn’t just affect the price of groceries or gas; it can also drive up your insurance premiums. Whether you’re insuring your home or your car, rising costs across the economy can directly influence how much you pay for coverage. At Pacelli Insurance, we understand that this may be a troubling trend for policyholders. Our team is committed to helping you navigate these situations and maintain appropriate coverage at ideal rates.

Why Inflation Affects Insurance

Insurance premiums are often based on the cost of replacing or repairing what’s insured. When inflation pushes up the price of building materials, auto parts and labor, insurers must adjust their rates to keep up with the increased cost of claims. Consider the following examples:

• Home insurance—For homeowners, inflation can lead to higher premiums because rebuilding costs increase. Lumber, concrete and skilled labor have all seen price hikes in recent years. If your policy doesn’t automatically adjust for inflation, you could be underinsured.

• Auto insurance—Your personal auto rates may also be impacted by inflation. If vehicle repairs become more expensive due to pricier parts, labor shortages and advanced technology in modern cars, those costs could be passed on to you.

Additionally, both home and auto insurance typically include liability coverage, meaning that if you’re found responsible for another party’s injuries, your policies may pay out for their medical expenses. Given how health care costs have increased in recent years, insurers must also account for these potential losses.

How to Combat Inflation

Although you might not have much of a say in inflation, you can still take steps to limit your premiums. Consider the following strategies:

• Shop around and explore policies available through various insurers.

• Bundle your home and auto insurance with the same carrier.

• Ask about discount opportunities, such as through taking safe driving courses.

• Improve your credit score.

• Increase your deductibles.

• Reconsider filing small claims.

Learn More

Contact Pacelli Insurance today to learn more about how inflation might be affecting your rates and discuss ways you can save while maintaining suitable policies.