You've been focused on your daily responsibilities when suddenly your insurance renewal arrives with an unwelcome surprise—another rate increase. This scenario has become all too familiar for many Central New York residents, leaving you wondering why your premiums continue to climb despite having no claims.
At the Horan insurance agency, we understand your frustration with these increases. We work with numerous carriers and can share information about how inflation affects your insurance rates throughout Central New York. Insurance rates have increased alongside other goods and services, but the connections between inflation and your insurance premiums aren't always clear.
In this article, we'll examine why inflation causes premium increases and how appropriate coverage helps ensure every dollar you spend provides adequate insurance for your property and assets.
The Often Overlooked Connection Between Insurance and Your Rising Cost of Living
When considering inflation, most people think about groceries, gasoline, and other everyday expenses. You've probably come to expect price increases for these items and might even accept them to some degree.
For many people, that acceptance doesn't extend to insurance rates. There's often a disconnect—everything else can increase in price, but insurance shouldn't.
Since insurance often fulfills legal requirements, some view it as a necessity for compliance. Without it, you can't drive your car, close on your home purchase, or open a business.
Insurance connects directly to the goods and services you use daily. Your car requires insurance for both legal and practical reasons. Using a vehicle without coverage would be like hiking rugged terrain in boots without soles.
When the cost of those goods and services increases, insurance rates naturally follow the same trajectory.
How Inflation Directly Impacts Your Insurance Premiums
Because insurance replaces items you use, their value affects your premium costs. Consider all the workers involved in servicing your claims:
After an auto accident, mechanics who repair your vehicle have received pay increases, raising labor costs. Parts prices have also increased, and if there's a labor shortage or supply chain issues, costs spike even higher.
The body shop sends your insurer the bill to repair your vehicle. You aren't alone—many others file auto claims during this period of wage and price increases. Rental car costs have also increased, extending the insurer's expenses while your vehicle gets repaired. Learn more about rental car reimbursement coverage.
Rental periods have lengthened because parts take longer to ship, and vehicles with advanced technology require specialized skills to repair.
Housing market changes, like the lumber price surge in 2021, also affect homeowners insurance. Fire damage restoration experts, drywall installers, painters, and flooring professionals all command higher rates when restoring your home after a loss.
The medical portion of your coverage faces healthcare cost increases. Doctors earn more, and pharmaceutical companies have raised prices beyond the rate of inflation.
Litigation costs from claims factor in as well, with increasing attorney fees passed to insurers.
Every professional mentioned—the mechanic, rental car attendant, lawyer, doctor, painter, and flooring expert—has experienced inflation in their business and must charge more for their services.
All these factors affect your premium costs. Yet some people believe their insurance rates should decrease!
Understanding the cause of rate increases helps, but paying more for inadequate coverage creates even more frustration for policyholders.
Also, be sure to read: Will New York Car Insurance Ever Be Cheap Again?
Why Understanding Your Insurance Policy Makes a Significant Difference
If you've experienced an accident or property damage and weren't adequately compensated after filing a claim, your policy likely wasn't written with your specific situation in mind.
This isn't necessarily your fault.
You might want to blame your insurer or the agent who sold the policy, but they probably aren't responsible either. The issue lies with industry practices.
For too long, people have purchased insurance without understanding their coverages because the insurance industry rarely educates consumers about the products they buy.
The Horan agency aims to change that tradition, which is why you're reading this article.
With policy premiums increasing, you deserve clarity about the coverage you pay for. But that clarity can be difficult to achieve when you have limited understanding of what you purchased, or uncertainty about whether it will meet your requirements when you need it most.
Our website provides educational resources about insurance policies so you can learn more about your coverage options. Suitable insurance can address various scenarios you might face.
Understanding Your Options During Inflationary Times
Inflation affects every aspect of our economy, including your insurance premiums. When you understand the relationship between rising costs and your insurance rates, you can make more informed decisions about your coverage.
We've explored how mechanics' wages, building materials, medical expenses, and legal costs all contribute to premium increases. These economic forces affect everyone, but knowing they exist helps put your premium increases in perspective.
Securing appropriate coverage becomes even more important when prices rise. Without it, you could face substantial out-of-pocket expenses when your budget might already feel stretched.
We've covered the factors driving your insurance premium increases and why understanding your policy matters. Reviewing your coverage regularly can help you maintain suitable protection while managing costs effectively.
Click the Get a Quote button below to connect with our licensed agents who can discuss your insurance requirements and help you explore coverage options from different carriers.
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