4 Reasons Why Auto Insurance is Increasing
August 2, 2023
The premiums for auto insurance continue to increase. According to statistics released in May 2023 by the U.S. Department of Labor, auto insurance premiums increased on average 17% in the previous 12 months across the US. Although the cost of insurance may change each year for various reasons, we’re going to break down the current market factors influencing policies:
1) Vehicle inventory – While the availability of new cars has rebounded in recent times inventory levels overall are still below average, and prices for used vehicles remain relatively high. As cars remain costly, insuring them may be more expensive too.
2) Higher repair costs – Inflation, supply chain issues lingering from the pandemic, high demand at auto shops and a car technician labor shortage have contributed to increased repair costs and the related price of auto insurance claims.
3) Rising medical bills – As health care costs have risen, auto insurance companies must pay more for medical services and personal injury protection (PIP) coverage. Consequently, premiums have also increased.
4) Increased claims – Car accidents and thefts have become more common in recent years, leading to more claims being filed against auto policies. As the number of claims rises, so too does the cost of insuring against them.
In response to rising auto insurance premiums, policyholders can consider the following ways to save:
- Stay safe – Avoid blemishes on your driving record by practicing safe habits behind the wheel.
- Bundle coverage – Purchasing multiple types of coverage from the same insurer may reduce overall costs.
- Maintain good credit – High credit card balances, late payments and other negative effects on a policyholder’s credit score may lead to higher premiums.
- Reconsider policy details – Adjusting your coverage, such as increasing your deductible, may help limit premiums.
- Drive less – Insurers may consider how far a policyholder drives annually. By reducing mileage and reporting accordingly, costs may be decreased.
- Discounts – Some carriers are offering substantial discounts for annual premiums paid-in-full.
- Be claim sensitive – Strongly consider when you want to submit a claim. For smaller expenses such as dents, dings, etc consider paying out-of-pocket.
Even among increased rates, auto insurance remains a critical loss control measure protecting you. Insufficient coverage could easily lead to legal issues in the event of an accident and catastrophic out-of-pocket costs.
Contact us today to review your current policy.