Summit Insurance Advisors
by Michael Harbron on Apr 14, 2022
Inflation is reaching its highest level in 40 years. Pent-up demand for goods and services is driving up the cost of just about everything. Price hikes can have a dramatic impact on your personal finances. Inflation can even affect the cost of your monthly insurance premiums if your provider decides to up their rates. Learn more about how inflation can affect your home and auto insurance in Scottdale, AZ.
How Does Inflation Affect Insurance Premiums?
Insurance premiums are just as susceptible to inflation as any other product or service. Insurance companies will annually review trends in the auto and housing industries when setting their insurance premiums for the following year. When the price to repair a home or car goes up, insurance companies will typically raise their interest rates accordingly. Both industries have been hit with supply chain issues and labor shortages over the last several years that have increased the cost of repairs. The price of lumber has gone up dramatically since the start of the COVID-19 pandemic. Automakers are also suffering from a lack of computer chips that power most of the vehicles on the market today.
When inflation is high, your insurance premiums will likely increase. The percentage of the increase depends on how much prices are rising in your local area.
How to Lower Your Home and Car Insurance Premiums
You may have trouble making ends meet if prices are rising faster than your income. If you are having trouble keeping up with your monthly insurance premiums, there are several ways you can reduce your bill without giving up your insurance altogether.
Consider bundling your home and auto insurance together by getting your policies from the same company. Many insurance companies offer discounts to customers that package different types of insurance together. It brings in more business for the company while reducing its overall risk portfolio.
Talk to your insurance company to learn about any discounts or special programs you may qualify for. You may be able to reduce your premiums by insulating your home or vehicle from risk. This can include anything that helps you safeguard your property, such as installing the latest safety equipment or surveillance gear, getting rid of debris that can lead to forest fires, or setting up roadside assistance. Make sure your insurance company will reward you for these upgrades before you spend the money.
You may also consider increasing your deductible when prices are rising. This is the minimum amount you must pay before the insurance company will cover the cost of repairs. Increasing the deductible will lower your monthly payment, but you will need to pay more out-of-pocket in the event of an emergency. If you decide to increase your deductible, make sure you have an emergency fund set aside just in case things take a turn for the worst.
Have your insurance agent Shop Around for you
Ask for quotes from different companies to see if they are any other insurance companies are offering a better value.
Inflation is a pain, but we all need insurance to get by. Contact Summit Insurance to find the best rates on Scottsdale home and auto insurance.
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