Inflation Hits Home (and Auto)

The talk of the town has been inflation in recent days, and no area of life and commerce seems to be exempt, including insurance rates.

According to the Bureau of Labor Statistics, car insurance rates have jumped 27% since the start of the pandemic.  CNN reported that car insurance premiums increased 19% just this year, the biggest increase in 49 years.

The numbers for homeowners insurance are even worse.  According to a study by Policy Genius, rates went up 21% in the last year.

The big question is why rates are going up so much, and in such a short period of time.  The reasons are many:

• Supply chain issues-in both the automotive and construction industries, many materials necessary for repairing homes and vehicles fell into short supply due to the pandemic, making fixing damage more costly.
• Labor shortages-like the lack of materials, lack of qualified repair personnel means higher prices for both insurers and their insured.
• Increases in natural disasters-in the aforementioned Policy Genius report, the first half of 2022 saw a loss of $6.6 billion due to natural disasters, with a jump to an astronimical $24.5 billion from natural disasters for the first half of 2023.

With not much relief in sight, what can people do to keep insurance-related inflation at bay?  Here are some suggestions:

• Shop different carriers to find the best rates.
• Get regular reviews with your insurance agent to see if there are any areas where you have unnecessary coverage.
• Consider raising your comprehensive and collision deductibles, depending upon the age of your vehicle and if you don’t owe any money on it.
• Ask about discounts.  Many insurers will give policyholders discounts for things like:
  • so many years of safe driving
  • Attending defensive driving classes
  • Being a member of certain civic or charitable organizations
  • Being a current or former first responder or military
  • Having good credit
• Try to bundle all of your policies with the same insurer, as many offer a significant discount the more types of insurance you carry with them.
• For car insurance, consider allowing the insurer to install a driving habit detection device in your vehicle, as many offer a rate reduction for them.
• Ask about the various ways to pay your premiums.  Some insurers offer a discount if you sign up for automated payments.  Others will give you a discount if you agree to pay your premiums in full at the start of your policy term as opposed to making monthly payments, for example.

Have rate increases resulted in anxiety increases for you?  Let Scott and his team relieve you of some that worry.  With over 25 years combined experience, Johnston & Associates brings the advantage of being independent agents who can shop the best companies for the best coverage at the best prices.  Serving the drivers, homeowners, and renters of Brentwood, Fairview, Franklin, Nashville, Spring Hill, and the rest of Middle Tennessee, they can make sure inflation doesn’t make off with your peace of mind.  Contact them today.