Updated November 30, 2023
Your auto insurance rate has probably gone up. Or it’s about to. Why, you ask? There are many reasons. While inflation has had a part to play, the answer is much more nuanced. This article briefly explores why auto insurance rates are increasing and what you can do to minimize costs on your policy while maintaining the protection you need.
What’s to blame for rising auto insurance rates
As auto insurance rates continue a years-long upward trend, inflation has definitely been piling on. For example, elevated inflation impacts the cost of car parts and repairs, which ends up affecting insurance costs. However, lately, as inflation continues to moderate, several long-term sources of insurance price creep are becoming more apparent once again, based on data from the National Highway Traffic Safety Administration (NHTSA), Federal Highway Administration, Governors Highway Safety Association, and more. Most of these contributing factors fit into one of two categories: driver behaviors and auto industry changes.
Driver behaviors
- High numbers of motor vehicle traffic crashes. In September 2023, NHTSA reported that 42,939 people died in motor vehicle traffic crashes in 2022, which was an increase of 10.1% over the fatalities recorded in 2021. The numbers projected for 2023 show a slight decrease, to 42,795 (-0.3%) from the 2022, but are still alarmingly high.
- More cars on the road. According to the Federal Highway Administration, close to 282 million vehicles were registered to U.S. drivers in 2021. That number is up more than 3.5% from 2017. That’s a lot of cars on the road, and it only appears to be growing — raising the risk for more crashes.
- Ongoing distracted driving. The Governors Highway Safety Association reported that 3,522 people died in “distraction-affected” crashes in 2021, an increase of about 12% from 2020. Of all fatal crashes in 2021, a total of 8% involved distracted drivers, including those who were texting and using social media while driving.
- Continued speeding. About one-third (29%) of all traffic fatalities in 2021 (12,330 deaths) were caused by speeding-related crashes, according to NHTSA. This was an 8% increase from 2020 to 2021, and a 14-year high.
BOTTOM LINE: More crashes mean more insurance claims, leading to increasing insurance rates across the country.
Auto industry changes
- Semiconductor chip shortages and vehicle inventory. Although overall inventories for both new and used cars are getting back to normal after the pandemic’s disruptions, the chip shortage continues for some car manufacturers and models, according to Kelley Blue Book.
- Rising auto repair costs. Even though the prices of both new and used cars have been coming down lately, they are still above pre-pandemic levels and repair costs after a crash are still very high.
- More expensive technology. As manufacturers continue to add high tech to new cars and trucks, repair prices continue to rise. There is no such thing as a simple bumper repair anymore.
BOTTOM LINE: More costly car parts, vehicles, and technology means they are more expensive to replace and repair, which translates into higher auto insurance rates to cover these losses after a crash or breakdown.
Ways to lower your costs
While you can’t control all the factors that impact auto insurance rates in general, there are several things you can do to save money on your policy. For starters, you might want to call your Bradish agent to discuss your vehicle insurance options. Find out if your carrier is offering any discounts. Is there a loyalty plan that offers perks such as second chances or deductible dividends? Look into payment plans if your insurance bill is getting to be difficult to pay in your current payment arrangement.
Increasing your deductible can be a good way to bring down the premium cost. Additionally, ask about bundling your home and auto insurance with one carrier. Very important: Maintain a good driving record by driving safely. Your carrier may also offer a rewards program for good driving. With your agent’s help, you may very well be able to reduce your costs while maintaining the protection you really need.
by Kris A. Mainellis
