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01-13-2022 10:43 AM
insurance rates are set by the STATE. The federal government has nothing to do with your auto or homeowners insurance. Except flood.
Insurance is by nature, a shared risk, which means everyone who pays that particular insurer is paying for others who are careless, clumsy, irresponsible or happen to live on top of a future sink hole.
Florida has bad hurricanes, the coasts are sinking into the ocean. Anyone who lives there is going to share that risk with everyone else.
As for inflation- it exists because citizens have more money in their pockets now than ever before. Monthly child tax credits, covid recovery payouts, wages which have risen about $1.46 an hour over the last year, 2% interest rates and low unemployment are to blame for inflation. When regular people have money they spend it. That causes a demand for items, which in turn increases the price of that iitem. Lets not even get into supply chain disruption because of the pandemic.
01-13-2022 10:49 AM
@JamandBread Probably a waste of time to try to explain. Up against so many political comments, so little time.
01-13-2022 12:46 PM
@Marp wrote:
@kaydee50 wrote:IMO, the car insurance the OP is paying is a bargain. As far as homeowners, considering all the disasters in FL, CA and other states, I'm not surpised that that insurance has skyrocketed.
@kaydee50, I think you misread the OP. It stated "My yearly premium went up $49.61/mth or $595.32 a year not that her premium is now $595 a year?
@Marp Oh, I misread it too. But that makes me feel better (but not @kaydee50)! Was thinking, $600 year is way better than mine.
01-13-2022 01:00 PM
Here in Colorado insurance rates have gone way up and a lot of it is b/c so many people are moving here which causes prices of everything to rise disproportionately. Car insurance is off the charts...so many accidents here b/c there are too many people on the roads here and not enough roads to accommodate all the traffic.
I had to raise the deductible on my home owners insurance just so that it is more affordable. It's getting almost beyond what I can afford and then with the extremely high rising property taxes I am a bit concerned about my future living in the house I've owned for nearly 30 years.
01-13-2022 01:09 PM
@SilleeMee wrote:Here in Colorado insurance rates have gone way up and a lot of it is b/c so many people are moving here which causes prices of everything to rise disproportionately. Car insurance is off the charts...so many accidents here b/c there are too many people on the roads here and not enough roads to accommodate all the traffic.
I had to raise the deductible on my home owners insurance just so that it is more affordable. It's getting almost beyond what I can afford and then with the extremely high rising property taxes I am a bit concerned about my future living in the house I've owned for nearly 30 years.
Is your state also experiencing more wildfires? That could cause an increase in overall homeowners insurance rates.....
01-13-2022 02:23 PM
I learned this back in the early 1970's with my Apartment Insurance. Lived in a different zone, outside city limits, so my rates were higher. Same insurance company/same city, just barely outside the city limits.
At that times it was because of house fires, according to my agent, who also was my good friend. Many of them caused by smokers(their phrase was CARELESS SMOKING, mine was, stupid left one burning somewhere in their home). "But I don't smoke"! Didn't mean a thing, and there was a Fire Station 3 blocks from my apartment.
It now in my area boils down to a zip code, even the last 4 digits, of it can change my home owners premium costs. And as you say, the price of lumber alone went up over 377% just this year.
hckynut
01-13-2022 02:44 PM
I'm in NC and also have had GEICO car insurance for at least 15 or more years. I drive under 1000 mi. a year (yeah, that's right), no accidents, no tickets, am 64 years old. Insurance went up about $250./year and I'm teed off about it. I have a loan on the car which I am paying off, so I have to carry the collision and comprehensive. I would like to drop the comprehensive as I've never had a comprehensive claim in almost 50 years of driving.
If anyone finds better rates at another company, please post. I'm thinking of 'The General' or maybe one of the on-line companies.
01-13-2022 03:22 PM - edited 01-13-2022 03:32 PM
@JamandBread wrote:
@SilleeMee wrote:Here in Colorado insurance rates have gone way up and a lot of it is b/c so many people are moving here which causes prices of everything to rise disproportionately. Car insurance is off the charts...so many accidents here b/c there are too many people on the roads here and not enough roads to accommodate all the traffic.
I had to raise the deductible on my home owners insurance just so that it is more affordable. It's getting almost beyond what I can afford and then with the extremely high rising property taxes I am a bit concerned about my future living in the house I've owned for nearly 30 years.
Is your state also experiencing more wildfires? That could cause an increase in overall homeowners insurance rates.....
Fires, hail and high winds have all occurred here in recent times. Plus Colorado is experiencing higher than normal inflation rates compared to the rest of the country right now. It has been in a boom state for several years. I've lived here for over 50 years and never have I seen so many people and businesses moving in. The real estate market is so hot. You can't find a house to buy. It's crazy. I realize that the market value has little to do with insurance rates but what is happening here is there is a lot of remodeling going on because people can't move out of their aging houses and that is causing a spike in building supply prices locally.
01-13-2022 03:27 PM
From Investopedia
Updated December 02, 2021
Inflation can occur in nearly any product or service, including need-based expenses such as housing, food, medical care, and utilities, as well as want expenses, such as cosmetics, automobiles, and jewelry. Once inflation becomes prevalent throughout an economy, the expectation of further inflation becomes an overriding concern in the consciousness of consumers and businesses alike.
Central banks of developed economies, including the Federal Reserve in the U.S., monitor inflation. The Fed has an inflation target of approximately 2% and adjusts monetary policy to combat inflation if prices rise too much or too quickly.
Inflation can be a concern because it makes money saved today less valuable tomorrow. Inflation erodes a consumer's purchasing power and can even interfere with the ability to retire. For example, if an investor earned 5% from investments in stocks and bonds, but the inflation rate was 3%, the investor only earned 2% in real terms. In this article, we'll examine the fundamental factors behind inflation, different types of inflation, and who benefits from it.
What Drives Inflation
There are various factors that can drive prices or inflation in an economy. Typically, inflation results from an increase in production costs or an increase in demand for products and services.
Cost-Push Inflation
Cost-push inflation occurs when prices increase due to increases in production costs, such as raw materials and wages. The demand for goods is unchanged while the supply of goods declines due to the higher costs of production. As a result, the added costs of production are passed onto consumers in the form of higher prices for the finished goods.
One of the signs of possible cost-push inflation can be seen in rising commodity prices such as oil and metals since they're major production inputs. For example, if the price of copper rises, companies that use copper to make their products might increase the prices of their goods. If the demand for the product is independent of the demand for copper, the business will pass on the higher costs of raw materials to consumers. The result is higher prices for consumers without any change in demand for the products consumed.
Wages also affect the cost of production and are typically the single biggest expense for businesses. When the economy is performing well, and the unemployment rate is low, shortages in labor or workers can occur. Companies, in turn, increase wages to attract qualified candidates, causing production costs to rise for the company. If the company raises prices due to the rise in employee wages, cost-plus inflation occurs.
Natural disasters can also drive prices higher. For example, if a hurricane destroys a crop such as corn, prices can rise across the economy since corn is used in many products.
Demand-Pull Inflation
Demand-pull inflation can be caused by strong consumer demand for a product or service. When there's a surge in demand for a wide breadth of goods across an economy, their prices tend to increase. While this is not often a concern for short-term imbalances of supply and demand, sustained demand can reverberate in the economy and raise costs for other goods; the result is demand-pull inflation.
Consumer confidence tends to be high when unemployment is low, and wages are rising—leading to more spending. Economic expansion has a direct impact on the level of consumer spending in an economy, which can lead to a high demand for products and services.
As the demand for a particular good or service increases, the available supply decreases. When fewer items are available, consumers are willing to pay more to obtain the item—as outlined in the economic principle of supply and demand. The result is higher prices due to demand-pull inflation.
Companies also play a role in inflation, especially if they manufacture popular products. A company can raise prices simply because consumers are willing to pay the increased amount. Corporations also raise prices freely when the item for sale is something consumers need for everyday existence, such as oil and gas. However, it's the demand from consumers that provides the corporations with the leverage to raise prices.
The Housing Market
The housing market, for example, has seen its ups and downs over the years. If homes are in demand because the economy is experiencing an expansion, home prices will rise. The demand also impacts ancillary products and services that support the housing industry. Construction products such as lumber and steel, as well as the nails and rivets used in homes, might all see increases in demand resulting from higher demand for homes.
Expansionary Fiscal Policy
Expansionary fiscal policy by governments can increase the amount of discretionary income for both businesses and consumers. If a government cuts taxes, businesses may spend it on capital improvements, employee compensation, or new hiring. Consumers may purchase more goods as well. The government could also stimulate the economy by increasing spending on infrastructure projects. The result could be an increase in demand for goods and services, leading to price increases.
Expansionary monetary policy by central banks can lower interest rates. Central banks like the Federal Reserve can lower the cost for banks to lend, which allows banks to lend more money to businesses and consumers. The increase in money available throughout the economy leads to more spending and demand for goods and services.
Measures of Inflation
There are a few metrics that are used to measure the inflation rate. One of the most popular is the Consumer Price Index (CPI), which measures prices for a basket of goods and services in the economy, including food, cars, education, and recreation.
In October 2021, the Consumer Price Index increased 0.9% on a seasonally adjusted basis. When compared to the year prior, the full index increased 6.2%, making it the largest year-over-year increase since 1990.
Another measure of inflation is the Producer Price Index (PPI), which reports the price changes that affect domestic producers. The PPI measures prices for fuel, farm products (meats and grains), chemical products, and metals. If the price increases that cause the PPI to spike get passed onto consumers, it will be reflected in the Consumer Price Index.
Who Benefits From Inflation?
While consumers experience little benefit from inflation, investors can enjoy a boost if they hold assets in markets affected by inflation. For example, those who are invested in energy companies might see a rise in their stock prices if energy prices are rising.
Some companies reap the rewards of inflation if they can charge more for their products as a result of a surge in demand for their goods. If the economy is performing well and housing demand is high, home-building companies can charge higher prices for selling homes.
In other words, inflation can provide businesses with pricing power and increase their profit margins. If profit margins are rising, it means the prices that companies charge for their products are increasing at a faster rate than increases in production costs.
Also, business owners can deliberately withhold supplies from the market, allowing prices to rise to a favorable level. However, companies can also be hurt by inflation if it's the result of a surge in production costs. Companies are at risk if they're unable to pass on the higher costs to consumers through higher prices. If foreign competition, for example, is unaffected by the production cost increases, their prices wouldn't need to rise. As a result, U.S. companies might have to eat the higher production costs, otherwise, risk losing customers to foreign-based companies.
01-13-2022 03:45 PM
I think that's true.
I've noticed though that some things are less than they were before. And some of the very same food products can vary $1-2 dollars depending on the store.
I think it depends on what and where people buy for how much they are seeing increases or not.
Though I think most all services, like car inspection have all increased which makes sense these days.
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