Managing Inflation and Auto Insurance Coverage

It’s no secret that insurance rates have been increasing along with pretty much everything else that costs money nowadays. Inflation has been and still is taking its toll on insurance rates. Please know that your agent is reviewing each insurance renewal individually and working to find ways to minimize increases where they can. We very much appreciate your patience during this unprecedented time and we thank you for your continued business.

Rate increases are just one side of the impact of inflation. The other side is increasing claims costs for both home and auto claims. Your insurance carrier and agent are doing their best to make sure your home insurance coverage is sufficient each year. If you are unaware, your home insurance coverage increases slightly each year to keep up with inflation – drastic action has had to be taken recently to make sure the coverage increases are in line with the recent inflation impact.

On the flip side, auto coverage does not change with inflation. Your own vehicle is always insured for its actual cash value as long as it has physical damage coverage (subject to your deductible), however, your liability coverage will remain the same until you request to change it. Let’s take a better look at liability coverage on an auto policy.

There are two ways of insuring for your liability – split liability limits and a combined single limit:

• Split limits example: Your coverage is 250,000/500,000/100,000. This means:
  • You have a $250,000 limit per person for bodily injury to other parties
  • You have a $500,000 limit total for each accident
  • You have a $100,000 limit for property damage to other vehicles or property
• Combined single limit example. Your coverage is $500,000 CSL. This means:
  • You have a total limit of $500,000 that can be paid toward bodily injury or property damage

You may look at these dollar amounts and think that is plenty of coverage for any scenario. However, keep in mind that inflation has caused an increase in car values, repair costs, and labor costs. If you have the split limits listed above, that $100,000 could be used up quicker than you think if there is a multi-vehicle accident.

There are a few solutions to this problem. The first is to increase your property damage liability or increase your liability limits as a whole. This is the simplest way to provide more of a cushion in case a bad accident was to occur.

The other solution is to purchase an umbrella policy. An umbrella policy provides extra liability coverage on top of your auto and home liability coverage. If your split limits or combined single limit are maxed out, your umbrella policy would kick in. A standard umbrella policy provides $1 million of coverage, but coverage can be increased if requested. For how much coverage it provides, an umbrella policy is extremely inexpensive.

Your personalized insurance policies should be a balance of sufficient coverage at a price that fits your budget. The wrench in the system that is inflation has caused the need to review both of those aspects. The advantage of having a CRG agent is the fact that they often have access to your insurance renewal before you receive a copy, and will take action right away if necessary. They can recommend the proper changes to make sure your coverage and budget remain balanced. So, rest assured knowing that your best interests are always being put first when you’re insured with CRG.