How Inflation Impacts Your Business Owner’s Insurance Needs
Have you bought groceries in the past six months? Then you probably know how inflation feels. In 2022, the inflation rate hit 9.1%. That’s the highest increase since 1981.
Everyone feels this every day.
If you’re a business owner, you know how inflation has impacted your bottom line. Check out this chart highlighting how inflation has impacted one bakery’s ingredients cost.
Baking, selling, and buying a birthday cake all just got a lot more expensive!
Price increases in every area of life can make your head spin. For the business owner, you feel added pressure. You have your own personal budget to worry about. Plus, the business. And your employees. Not to mention customers or vendors!
In the middle of this unrelenting price increase, have you stopped to consider how your insurance needs have also changed?
If not, you need to before it’s too late.
Outdated Business Owner’s Property Insurance Policies can be Insufficient
If your business operates out of a brick and motor location, or multiple locations, have you considered how replacement costs have increased?
Raw material costs for construction have risen by 14% in 2022. And just like every other industry, labor, and other expenses have also increased.
This means that while the real estate value of your property may not have increased, repair and replacement costs certainly have.
Suppose you have not adjusted your business owner’s property insurance to reflect current prices. In that case, you could be at risk of being unable to cover the cost of damages to your property.
Transportation
Does your business rely on transportation? If you haul inventory, travel for meetings, or rely on mobility for a different reason, inflation impacts your insurance needs here as well.
Inland marine insurance, as an example, should be reevaluated in light of inflation. Our partners at Nationwide Insurance define inland marine insurance as “property in transit” insurance. So even though “marine” is in the name, this type of insurance is not exclusive to the waters.
Many businesses transport and store inventory, materials, and equipment. If anything happens to materials owned by the business while in transit or stored off-site from company property, your business insurance plan may not cover the loss.
This just considers the inventory or company materials in transit. If you own company vehicles, inflation’s impact will be even greater.
The US Department of Labor reports that auto repair costs have risen by 15%.
If you prefer to replace a vehicle instead of repair it, you’re in even deeper waters. It’s reported that used car prices are up 45%.
If you still need to review the transportation insurance needs of your business, make today the day.
Inventory
Your inventory can be protected by multiple forms of commercial insurance, including:
- Crime
- Commercial Property
- Commercial General Liability
- Commercial Umbrella
- And more
The trick here is that even if you’ve determined not to keep your prices pace with inflation, replacing your inventory has undoubtedly become more expensive.
If your property is damaged and your inventory is affected, replacing it will cost you more.
Remote Workers
According to research done by Forbes, 25% of all American jobs will be remote by the end of 2022. Many experts expect that percentage will only increase.
If your business allows employees to work at home or on the road, do you know what aspects of remote work are covered by your current business insurance plan?
Since this level of remote work is a relatively new development, your insurance coverage may not be up to speed.
Indeed.com lists the top 14 types of remote work currently. Here’s a sampling.
- Project Manager
- Accountant
- Freelance Writer
- Software Engineer
Does your business rely on or allow remote work like this? For any business that accommodates remote work, your insurance needs will also be impacted.
The cost of inventory, liability, and more has increased for businesses that utilize a remote work model.
JFA Insurance is Here for You
We’ve been insuring businesses for over 25 years. This isn’t the first time we’ve hit a curve ball. JFA Insurance Brokerage and Associates, Inc has navigated massive cultural and historical moments.
From broad, sweeping legislative changes to the tech revolution to tragedies like 9/11 and more. Our compassionate and knowledgeable team has helped many businesses survive what could have sunk them without the proper insurance coverage and agents.
You don’t need to go it alone. We’ve done the math. We know the industry. Together, we can ensure you are adequately insured.
With JFA Brokerage and Associates, Inc on your side, you can rise above inflation.
Reach Out Today
Our team of friendly professionals is ready to help you navigate these rising waters. Reach out today for a free consultation. Or contact us any time with any questions you may have.
You can get through this. We can help.