Let’s set the scene. You’ve just received your auto insurance bill, and yikes! It’s a lot more expensive than you were expecting. Why is that? Well, across the board we’re seeing an increase in auto insurance rates due to several different factors:
High Inflation Rates
The U.S. inflation rate is at an all-time high. In fact, we’re experiencing a record-breaking 40-year high right now. This inflation spike is pressuring companies to raise their prices, hence why the cost of car repairs and rentals is going up. When prices rise, so does your auto insurance rate to account for those added costs.
Global Supply Chain Issues
The pandemic has disrupted supply chains worldwide, and experts predict that these issues will persist in the long run. That means shipping backlogs and product shortages on top of high inflation. These global shortages make acquiring car parts for new and used vehicles difficult and more expensive. In fact, the average cost of used cars has gone up by a whopping 40% since last year, and new car production will be stunted by parts shortages for the foreseeable future.
Unfortunately, product scarcity and rising auto repair costs have to be factored into your auto insurance rate.
Going hand in hand with product scarcity, industry-wide labor shortages are commonplace as the economy struggles to bounce back from the pandemic. Fewer workers mean longer repair times, which affects prices and your auto insurance rate.
More Drivers on the Road
During the early days of the pandemic, very few drivers were on the road. This led to fewer traffic jams and accidents, which prompted insurance companies to give money back to drivers as compensation. But now people are driving more and we’re seeing increased costs and insurance rates.
That, plus an uptick in reported accidents. The National Highway Traffic Safety Administration reported that we saw a 12% increase in fatal car crashes in the first 9 months of 2021. Most involved impaired driving, speeding and failure to wear a seatbelt.
Vehicle Technology Has Advanced
Long gone are the days when the horse and carriage were our primary means of transportation. But now modern-day cars are in a league of their own, often called “computers on wheels.” Advancements in telematics, cruise control, lane assist, rearview cameras, Bluetooth and Wi-Fi connection, emergency braking and other technologies dramatically increase costs to repair or replace them.
So if you own a newer vehicle with these technologies, you shouldn’t be surprised to see your auto insurance rate go up. Combine this with high inflation, global supply chain issues and an increase in auto repair costs and fatal car accidents, and you have a perfect storm.
How Can You Lower Your Auto Insurance Rate?
Obviously, how you drive, where you live and your age also impact your auto insurance rate, but what factors are within your control to lower it? You can start by reviewing your policy with a licensed insurance agent. They’ll explain why prices are so high, and what steps you can take to potentially reduce your monthly premium.
Working to improve your credit score may have an impact on your auto insurance rate as well. Also, some insurance providers may offer discounts for safe driving, multi-vehicle plans, bundling home and auto insurance, defensive driving courses and more. And it should go without saying that avoiding crashes and driving violations like speeding tickets will keep your rate from increasing.
Interested in Auto Insurance at a Discounted Rate?
The insurance industry forecasts that auto insurance rates will continue to rise in the coming months. But did you know AAA members can save up to 15% on auto insurance? Speak with a AAA Insurance agent or visit AAA.com/AutoInsurance to request a free quote today.