Inflation affects insurance premiums because it increases the costs of insurance claims.
When insurance claims become more expensive, insurers usually cover this cost through higher premiums.
Talk to your Western Coast insurance expert about getting the right insurance at the right value for you. We have the knowledge and expertise to guide you through this process.
Does inflation affect insurance premiums?
Inflation affects insurance premiums through rising claims costs. Because inflation makes claims more expensive to settle, this increase in cost will eventually get passed on to consumers. Inflation is expected to increase home and car insurance premiums but should not affect life insurance much because benefits are defined at policy inception.
Premiums for car insurance saw a minor decrease of 0.7% in June 2022 and home and mortgage insurance rates went up by 4.9%. Experts believe it is only a matter of time before insurance premiums, including car insurance, increase to reflect inflation.
How does inflation affect home insurance premiums?
Inflation affects home insurance premiums because it increases claims costs. Shelter-related costs spiked in June and property repair and maintenance, home replacement costs, and rented accommodation costs all increased.
This means that when a homeowner makes a claim on their home insurance, the cost of repairing or replacing their home is higher and the cost of rented accommodations if they need to move out while repairs are being done is also higher. Higher costs for insurers mean higher home insurance premiums.
Your Western Coast home insurance expert will answer any questions you may have about how inflation affects home insurance and which policy is right for you.
How does inflation affect car insurance premiums?
Inflation affects car insurance premiums by making them higher. Like with home insurance, car insurance claims costs are increasing. In June, parts, repairs, and maintenance increased by 6.1%, replacing vehicles by 8.2%, and renting vehicles by 28%. Insurance often covers car rentals while drivers wait for their car to be repaired. In addition to high costs, longer wait times for parts because of supply chain issues are making claims more expensive.
How high is inflation in Canada?
The most recent Consumer Price Index, which measures inflation in Canada, indicated an 8.1% inflation rate in June 2022 year-over-year. This is the largest annual cost of living increase since 1983.
The most recent Consumer Price Index can be found here:
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