Insurance rates have gone up across the board for several reasons, six of which are the most impactful: accidents, the severity of accidents, inflationary pricing on parts and labor, the increase in uninsured drivers, the high price of cars as well as theft and vandalism. Your particular policy premium may be even higher than the average in your state, if you have had an accident, traffic citations, a DUI, a low credit score, several car insurance claims on record or had a lapse in car insurance coverage.
Until car insurance prices go down, the only way to get a low price on car insurance is to shop around for various quotes from insurers and to apply as many discounts with the new carrier you choose.
Let’s take a look at the factors that are hiking up insurance premiums across the country.
Accidents Are More Frequent and More Costly
In 2022, insurance rates increased by about 9% because accidents have become more expensive for insurance companies to cover. There are many reasons why accidents are more costly, but the two top reasons are inflation and the high value of cars.
Inflation has raised the price of parts and labor exponentially. An accident usually requires new parts and hours of labor. Also, newer cars have safety features, like cameras and sensors, which make them more costly to insure. These expensive cars raise prices across the board, in case you cause an accident with one of these high-tech and expensive models.
Severity of Car Accidents
According to the United States Department of Transportation, 9,560 people died in car crashes in the first quarter of 2022. That is a 7% increase from 2021. Coverage for injuries is expensive, especially when people don’t have health insurance and if a passenger or driver dies.
More and more accidents happen each year due to distracted driving, which includes texting and driving. An at-fault driver, who only has minimum state-required car insurance, is not covered for their own injuries and neither are their passengers unless they have medical payments coverage, an optional type of insurance many people do not have, and which does not have a deductible. It is even preferable to use health insurance if your health plan has a deductible.
Cost of Parts and Labor
New cars are more costly to repair and replace because they are expensive, but inflationary prices on the necessary tools and parts to repair a car after an accident are causing premiums to rise too.
The cost of labor for more technologically advanced cars is reflected in rising insurance rates as well. Only skilled technicians can fix these cars, and they cost more to employ.
Insurance rates have adjusted rates that reflect price hikes on things like catalytic converters and tire replacements due to vandalism and/or accidents.
Increase in Uninsured Drivers
There were half a million more uninsured drivers in 2019, and that number has only risen since then.
If there is a trend of hit-and-run accidents or collisions involving uninsured drivers, insurance rates go up in that neighborhood, city, or state to cover losses.
Buying uninsured motorist coverage will prevent you from paying out-of-pocket expenses if you don’t have collision coverage.
Car Vandalism and Robbery
Carjacking and catalytic converter thefts jumped 325% between 2019 and 2020. The number continues to rise. Only comprehensive coverage covers carjacking and parts theft, and prices for coverage are expected to rise through the new year.
High Car Prices
The more expensive a car is, the more expensive it is to insure. The shortage of semiconductor chips, which started with the COVID pandemic, slowed down the production of cars and drove up prices on the cars that were manufactured.
The average cost of a new car is over $48,000 and will significantly increase car insurance premiums. Even if you drive an older car, in case you have an accident with a newer, more expensive one, your car insurance rates will probably increase too.
Car Insurance Prices FAQs
I was in a car accident but it wasn’t my fault. Will my rate go up?
As unfair as it may seem, your car insurance premiums will also go up, if you filed a claim to pay for damages. Your rate will not go up as much as the at-fault driver’s but each time you file a claim, your rate will increase upon renewal.
When will car insurance prices go down?
If inflation settles down, prices will go down. Also, if more people buy car insurance instead of driving uninsured, prices will decrease for everyone. If the trend of texting while driving ends, there will be fewer accidents and rates will drop quite a bit.
How can I save if prices are rising?
There are a few things you can do to lower your cost: drive less and use a telematics program that tracks your mileage and driving behavior. You can also buy a less expensive car, apply as many discounts to your policy as possible, raise your credit score and report to the insurance company if you begin parking your car in a more secure location, like a garage instead of street parking. The biggest savings, however, come from comparing car insurance companies’ offerings and prices.
Key Takeaways
- Factors outside of a driver’s control have driven up car insurance rates, which may continue to rise in the year 2023.
- Accidents happen more often and are more costly due to the high prices of cars and the technology on newer models.
- Car vandalism and robbery are still pressing issues and so is the high number of uninsured drivers on the road.
- Inflation has jacked up prices on car parts and labor, which is reflected in higher insurance rates.
Even though the pricing on car insurance may seem out of control, some insurers, especially smaller local ones, are offering lower rates. You may even save money by breaking a car-and-home bundle to switch to a new car insurance carrier. Compare auto insurance rates, all on the same day, to compare coverages and pricing most accurately.
