The Impact of Inflation on Insurance Premiums and How to Handle It
By Rozmek Team
•
September 25, 2025
You've felt it at the grocery store, the gas station, and now you're seeing it in your insurance renewal notice: inflation. It's not your imagination—insurance premiums, especially for home and auto, are on the rise across the country.
But why is this happening, and what can you do about it? Here’s a simple breakdown of how inflation impacts your insurance and how you can fight back.
Why Inflation Is Driving Up Your Premiums ????
The core reason is simple: Insurance pays to repair or replace things, and the cost of everything has gone up. Your premium is a reflection of how much it would cost the insurer to make you whole after a claim.
For Your Car ????
Higher Repair Costs: The price of car parts, especially the high-tech sensors, cameras, and computer chips in modern vehicles, has skyrocketed.
Expensive Labor: The wages for skilled auto mechanics have increased due to labor shortages, making every repair more costly.
High Value of Used Cars: The market value of used cars has remained high, which means if your car is totaled, it costs the insurance company much more to pay you for its replacement value.
Rising Medical Costs: If someone is injured in an accident, the cost of their hospital stay, surgery, and physical therapy is more expensive than ever before.
For Your Home ????
Skyrocketing Rebuild Costs: The cost of lumber, roofing materials, copper wiring, and other essential building supplies has soared.
Labor Shortages: It costs significantly more to hire skilled contractors (plumbers, electricians, roofers) to rebuild a home after a fire or major storm.
The Bottom Line: The cost to completely rebuild your home today is likely tens of thousands of dollars higher than it was just a few years ago. Your insurance premium has to rise to cover that increased risk.
How to Handle Rising Costs and Fight Back ????
You can't control inflation, but you absolutely can control how you manage your insurance policies.
1. Don't Just Renew—Reshop!
This is your #1 weapon against rising costs. Don't just blindly accept your renewal notice, even if the increase seems small. Another insurer may be offering a much better rate in your area.
The Action: Before your policy renews, get at least three to five new quotes from different companies. This is the single most effective way to ensure you're not overpaying.
2. Re-evaluate Your Coverage (But Be Smart!)
Inflation is a good reason to do a check-up on your policy.
For Home: With rebuild costs so high, you should double-check that your dwelling coverage is still high enough to completely rebuild your home. You may need to increase it.
For Auto: If your car is getting older and its value has dropped, it might be time to consider dropping collision and comprehensive coverage and only keeping liability.
3. Raise Your Deductible
One of the quickest ways to lower your premium is by agreeing to take on a slightly larger share of a potential claim.
The Action: Ask your agent for a quote to raise your deductible from, say, $500 to $1,000 or $1,500. The annual savings can be substantial. Just make sure you have that amount saved in your emergency fund.
4. Maximize Every Discount
Call your agent and ask for a full discount review. Are you taking advantage of everything you're entitled to?
The Questions: "Am I getting a discount for bundling?" "Would a telematics program for my car save me money?" "Do you offer a discount for my profession or for having a home security system?"
While rising premiums are frustrating, being a proactive and informed consumer is the best way to keep your costs as low as possible without sacrificing the crucial protection your family needs.
But why is this happening, and what can you do about it? Here’s a simple breakdown of how inflation impacts your insurance and how you can fight back.
Why Inflation Is Driving Up Your Premiums ????
The core reason is simple: Insurance pays to repair or replace things, and the cost of everything has gone up. Your premium is a reflection of how much it would cost the insurer to make you whole after a claim.
For Your Car ????
Higher Repair Costs: The price of car parts, especially the high-tech sensors, cameras, and computer chips in modern vehicles, has skyrocketed.
Expensive Labor: The wages for skilled auto mechanics have increased due to labor shortages, making every repair more costly.
High Value of Used Cars: The market value of used cars has remained high, which means if your car is totaled, it costs the insurance company much more to pay you for its replacement value.
Rising Medical Costs: If someone is injured in an accident, the cost of their hospital stay, surgery, and physical therapy is more expensive than ever before.
For Your Home ????
Skyrocketing Rebuild Costs: The cost of lumber, roofing materials, copper wiring, and other essential building supplies has soared.
Labor Shortages: It costs significantly more to hire skilled contractors (plumbers, electricians, roofers) to rebuild a home after a fire or major storm.
The Bottom Line: The cost to completely rebuild your home today is likely tens of thousands of dollars higher than it was just a few years ago. Your insurance premium has to rise to cover that increased risk.
How to Handle Rising Costs and Fight Back ????
You can't control inflation, but you absolutely can control how you manage your insurance policies.
1. Don't Just Renew—Reshop!
This is your #1 weapon against rising costs. Don't just blindly accept your renewal notice, even if the increase seems small. Another insurer may be offering a much better rate in your area.
The Action: Before your policy renews, get at least three to five new quotes from different companies. This is the single most effective way to ensure you're not overpaying.
2. Re-evaluate Your Coverage (But Be Smart!)
Inflation is a good reason to do a check-up on your policy.
For Home: With rebuild costs so high, you should double-check that your dwelling coverage is still high enough to completely rebuild your home. You may need to increase it.
For Auto: If your car is getting older and its value has dropped, it might be time to consider dropping collision and comprehensive coverage and only keeping liability.
3. Raise Your Deductible
One of the quickest ways to lower your premium is by agreeing to take on a slightly larger share of a potential claim.
The Action: Ask your agent for a quote to raise your deductible from, say, $500 to $1,000 or $1,500. The annual savings can be substantial. Just make sure you have that amount saved in your emergency fund.
4. Maximize Every Discount
Call your agent and ask for a full discount review. Are you taking advantage of everything you're entitled to?
The Questions: "Am I getting a discount for bundling?" "Would a telematics program for my car save me money?" "Do you offer a discount for my profession or for having a home security system?"
While rising premiums are frustrating, being a proactive and informed consumer is the best way to keep your costs as low as possible without sacrificing the crucial protection your family needs.