If you’ve noticed your car insurance rates rising recently, you’re not alone. Many drivers across the U.S. are experiencing increasing car insurance rates, some of which are high enough to cause financial challenges for many policyholders. Numerous factors can impact premium increases, including inflation, supply chain issues, location, driving habits and insurance providers. Understanding what may cause car insurance rates to increase can help you anticipate fluctuations in your own premiums.
Learn why you may be paying more for auto insurance and how to mitigate the effect on your insurance bill.
From auto and home to life and health policies, most insurance rates are higher this year. The cost of inflation has increased operational costs for various businesses and industries, including insurance companies. Unfortunately, these cost increases, among other factors, can result in higher premiums for policyholders.
You may not notice a significant increase in your car insurance rate, as premiums are primarily based on individual factors like your vehicle, driving record, location, and coverage amounts and types. In most cases, your car insurance increase in 2023 will depend on your driving situation.
It’s also worth noting that not all insurance providers and policies will be affected the same. For example, some providers have increased rates across the board, some increased premiums in certain areas, and others have tried to keep their rates the same or even decrease premiums when possible. It’s best to connect with your insurance provider regarding potential premium increases. Your insurance agent can help you understand any changes to your policy’s pricing.
While factors like the type of vehicle you drive or how much coverage you have are somewhat in your control, numerous external factors can also impact car insurance rates. Here’s a closer look at various reasons you may see a car insurance increase in 2023.
Economic inflation continues to be the leading cause of increasing car insurance rates and higher prices in nearly every industry. For example, everything from grocery and electronic prices to car and labor costs has risen. Because the cost of inflation has caused nearly everything to increase, car insurance rates also increase to reflect inflation. Inflation significantly impacts insurance rates because it has a domino effect. As it increases costs in one area, those prices affect other factors like auto insurance rates.
Auto insurance is designed to cover accident-related costs, including property damage and medical expenses. If the cost of these factors increases for any reason, car insurance rates are also likely to increase.
Since inflation also affects health care costs, increased medical costs require insurance companies to provide a bigger payout when someone suffers a car crash injury. As such, car insurance may increase to compensate for increased health care costs.
More people returning to the office and regular travel means more people on the road. Increased traffic raises the risk and severity of a crash. This factor could affect insurance rates more significantly in more heavily populated areas, as traffic is likely to be heavier at any given time.
Your personal driving habits can also impact your car insurance premium. For example, risky driving behavior or a poor driving record will increase your rates, as you’re a bigger risk for your provider to insure. Insurance providers may increase premiums so they have more money to allocate for accident claim payouts.
Many supply chains are still facing issues and trying to regain traction after being shut down during the pandemic. Vehicle ownership has overall become more costly because demand is so high and supply is low in the auto industry. As such, vehicle parts cost more, and shipping and receiving processes have significantly slowed. These supply chain issues stacked on top of each other can lead to increased car insurance rates.
Since the sale prices of vehicles have increased, so have repair costs. Various factors impact vehicle repair costs, including supply chain issues, the cost of car parts and the complexity of a vehicle’s technology. For example, vehicles with more advanced technology inherently cost more to repair, even if the accident was minor. As such, insurance providers have to pay out more in claims to cover the cost of repairs, so your premiums may reflect that.
Auto insurance rates frequently change from year to year, so it’s possible they could go back down. The factors that are currently increasing rates are ultimately what will influence whether rates go back down. For example, if supply chain disruptions are resolved and inflation decreases, car insurance rates may drop. If accidents and claims decrease in your area, rates may also drop.
Keep in mind that your individual factors like credit score, marital status and age also influence your auto insurance rate, so any changes in these areas may also cause your rates to decrease. For example, improving your credit score may help lower your insurance rates.
Despite inflation and supply chain issues being out of your control, there are still a few ways you could save on rising insurance rates. Before you end your coverage or change your policies to make them more affordable, consider how you can save on your car insurance.
You’re most likely to see a premium increase when your policy renews. Note when your policy is expected to renew and assess your current coverage, discounts and premium. If you’ve received notice of a premium increase, compare how much your premium will change. This is also a good time to consider whether any of your policies, including auto, can be bundled for extra savings. For example, many providers offer a discount for bundling policies like your home and auto insurance.
Many insurance providers offer various discounts that will lower your rates. For example, here are several common potential car insurance discounts:
You can typically stack discounts to lower your premium even more. It’s also common for insurance companies to provide certain discounts only when you ask about them, so be sure to talk with your insurance agent about potential discounts.
Your deductible is the amount you’d have to pay out of pocket if you file a claim. The cost of your premiums depends on your deductible. The higher your deductible, the lower your monthly premiums will be. So, increasing the deductible on your policy can help lower your monthly insurance rates. Be cautious when selecting a high deductible — if you need to pay the higher deductible, you could face a difficult financial situation. This option is typically best for policyholders who have savings and could cover the high deductible cost if that situation arose.
If you’ve talked with your insurance agent and they can’t get your premium where you want it to be, you may want to consider switching insurance providers. Request policy quotes from several providers to determine the best prices. Policy features, prices, rules and discounts vary between providers, so shopping around allows you to find the best deal. Be sure to consider local providers, as they can be more affordable since they better understand the area’s driving needs.
If you’re unhappy with auto insurance costs rising, consider shopping with David Pope Insurance Services, LLC. We’ll find an affordable policy that fits your coverage needs. Whether you need a policy for your car, motorcycle or RV, we’ll find the perfect one and can help you bundle policies and insure multiple vehicles for additional savings. We proudly serve clients across the Midwest, including Missouri and the surrounding areas.
For the most competitive auto insurance rates, request an auto quote from us today or contact us directly for more information.