Most of you by now (or in the past year) have been attacked by inflation. Either at the grocery store, fuel pumps, dealership, home or business costs or monthly rent. This has been brought on through a variety of reasons – supply chain crisis, large amounts of printed money by the Fed, increased purchasing power, food and energy shortages, etc.
With these significant impacts, asset prices have gone up at a rapid ascent. This includes your vehicles, homes, businesses, machinery, equipment, land, etc.
There are signs that the tide is turning and prices are working their way back to normal, for example in March 2022, the average home price sold in Canada was $816,000 and by the end of the year in December 2022, it had dropped down to $626,000. This might be related to the increased interest rates and a slower rate of sales, but the pendulum seems to be starting its swing back.Wowa.ca – Canadian Housing Market Report (December 2022)
However, we may not see the pendulum swing fully back to where things were. So it is important to review your home insurance, farm insurance and business insurance to be sure you have adequate limits of protection on your high value assets. Some brief things to review:
With increased construction costs, you should review you building limits as they are likely insured for replacement value. As these values have spiked, please contact a local contractor to be sure your limits are adequate in today’s market. Most insurers add “inflation index” of 3-5% per year for added protection, but that might not enough based on the last few years.
Stock and Inventory
Any retail business or farm might want to increase the values of their stock and inventory to protect the increased value of their goods. If a fire were to occur, they may be underinsured when they go to replace it with new product. For example: Grocery Stores, Furniture, Building Supplies, Seed, Fertilizer, Chemical, etc.
Due to supply chain disruption, you should make sure you have adequate business interruption coverage in place for longer durations of down-time. If you had a fire and were unable to get your business up and running after a claim, due to delays in product/material availability, you could be losing revenue for the months you are down. 12 months was a typical time-frame for down-time, now you may need to consider 18-24 months.
Equipment and Machinery
Certain parts or items are manufactured in eastern Europe or have been bottlenecked in other areas of the world and it has become difficult to rely on the supply chain and obtain these items in a timely manner. Dealerships and Machinery companies have had short supply of equipment and parts, so be sure you have loss of use coverages and extra expense endorsements to make sure you can continue your business operations with or without the proper equipment on hand. This goes for vehicles as well. If your vehicle is in an accident and parts are unavailable and you are without a vehicle for weeks (or months!), you might need loss of use coverage to pay for a rental to get you by.
Guaranteed Replacement Cost
If you are eligible, confirm you have this coverage. This coverage is important to make sure the insurance company is guaranteeing the cost to rebuild/repair/replace your building to a similar state prior to the loss, no matter what the cost. This is a huge deal during these times of turmoil, so be sure to contact your broker to confirm this coverage. We offer this coverage on our homeowners products. Click here to get started.
These are just some examples of how your insurance policy can/will protect you from an inflation crisis. If you have any questions, feel free to reach out to us or contact your insurance broker.