Unfortunately, when periods of inflation appear throughout history, cost increases affect all kinds of goods and services, including business insurance. When you are securing financial protection for assets such as buildings and their contents, the insurance levels and coverage draw from a reconstruction cost calculation. Some policies have the convenience of an “inflation guard” provision, but these may not be sufficient to cover a sharp spike.
Understanding The Cause and Effect of The Current Spike
Inflation is the official measure of the cost increase that takes place for goods and services. The rate of inflation is measured by closely looking at the Consumer Price Index and converting it into a reactionary percentage point.
Many economic experts believe that the high inflation rate is directly linked to the world attempting to get back on its feet and open back up so quickly after the pandemic, as an ideal inflation rate is 2% instead of the 8% that we are currently experiencing. One reason why businesses have to pay such close attention to inflation is that the steps taken to reverse it sometimes take time to have a positive effect. Sometimes the global events that seem like a perfect storm will lead you to review your coverage and make needed modifications that will have a positive effect on your business future.
Proactively Making Your Business Not as Vulnerable
Global economies can be very difficult to fully understand, but a high inflation rate usually guarantees one thing regarding business insurance: the limits on insurance are determined based on exactly what the insured items are worth, and as inflation goes up, it becomes even more necessary to make sure that you have enough coverage. Part of the bright side during these times is that making changes to your business insurance coverage is easy! Just give us a quick call at Alexander Insurance.
Looking at a Crucial Update to Insurance Limits
When a period of inflation arrives, it is a good time to look at how well your valuable assets and structure are covered. As costs of supplies and labor rise sharply, it can seem as though businesses are perpetually at the mercy of inflation, always having to be the first in line to pony up and pay more. We’re happy to let all our clients know that this summer, the inflation you see every day on the news won’t burden you if you are up to date with maintaining adequate business insurance coverage for your needs!
Entrepreneurs with an all-American spirit are giving it their all every day, and they are experiencing this crunch while running their businesses and trying to cover bills like every other citizen. It all becomes more challenging as costs rise rapidly, and making sure that you have appropriate and time-sensitive insurance coverage will allow you much more peace of mind for your future as well as your family.
Visit us at Alexander Insurance this summer to outline a plan for your future, assuring that everything you worked for remains viable and protected and not susceptible to inflation!