• Wed. Sep 21st, 2022

With inflation and high car prices, how much more could your car insurance cost?

Auto insurance rates could continue their upward trend as consumers begin to drive their cars more in the wake of pandemic shutdowns.

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Drivers can expect to encounter a few speed bumps when it comes to paying their auto insurance premium this year. After already rising by 12% in 2021, according to a report by Insurify, premiums are expected to rise another 5% this year. “Many consumers can expect higher rates,” says John McCormick, editorial director of CarInsurance.com, Insurance.com and Insure.com. (You can see the lowest auto insurance rates you might qualify for here.)

Rates could also continue this upward trend as consumers drive more, says Michael Giusti, analyst at InsuranceQuotes.com. “When we all went into lockdown our cars mostly stayed in our driveways. Fewer miles on the road means less risk of accidents and, by extension, lower rates. Now that the shutdowns are over, things are largely back to normal and, in many cases, more expensive,” says Giusti.

Why are auto insurance prices rising?

According to a recent report from InsuranceQuotes.com, the biggest driver of rate increases is the total cost of replacing a vehicle. With inflation in full swing and shipping and production delays still in play due to the pandemic, Bureau of Labor Statistics data for January shows new car prices jumped 12% and used car prices increased by 40.5% compared to the previous year.

Other factors are also at play. “Increasing repair costs, supply chain issues, higher medical costs, poor driving resulting in more serious and more frequent accidents, as we are among the pre -pandemic of cars on the road, all affect the cost of car insurance,” says Ruiz. (You can see the lowest auto insurance rates you might qualify for here.)

Additionally, the international shortage of semiconductors has derailed the auto industry for months, slowing production of new vehicles and inadvertently increasing demand for used cars. Additionally, an increased number of natural disasters in 2021 accounted for more than $105 billion in insured losses, leading insurance companies to raise premiums according to data from Swiss Re Group, a global reinsurance provider, insurance and insurance-based risk transfer.

Another reason for rates to rise is inflation. “This increases the costs of parts and repairs and another factor is an increase in accidents from the lows seen during pandemic shutdowns,” says McCormick.

How to get cheaper car insurance

To save money on auto insurance this year, Ruiz recommends shopping around and comparing deals (you can see the lowest auto insurance rates you might qualify for here.), raising deductibles , remove comprehensive or collision coverage on older cars, and take advantage of insurer discounts. . “Combine home and car, [opt in to] safe driving programs, [look for a] IIHS car safety rating, look for low mileage discounts, and look for loyalty discounts,” adds Ruiz.

Another big trend that could potentially save you money is usage-based insurance, which charges policyholders based on how they drive. “Insurers offer a variety of safe driving incentives, including telematics devices [these get installed in your car to monitor driving behavior] and phone apps, pay-per-mile options and more,” says Ruiz. These programs use on-board sensors, which are connected to the vehicle’s diagnostic port or a smartphone app, to determine things like the number of miles driven, the time of day a vehicle is used, the number sudden stops and rapid accelerations that take place. and other variables that could present risks. (One caveat to consider is that not all states allow usage-based insurance, and drivers must register to be monitored.)

When looking to save, it’s important to make sure you’re buying the right amount of insurance. “If you don’t have a lot of assets or your vehicle isn’t worth much, it may not make sense to max out your policy limits. That said, make sure you buy enough to protect yourself and your family,” says Giusti.

“Don’t forget to ask for discounts. Good students have their premiums reduced a little. Military vets can sometimes save money and people with good credit can get a discount depending on the policy and state they are in. But you often only find these discounts by asking what’s available,” says Giusti.

How much money can I save on car insurance?

As for how much someone can save, a Nerdwallet survey found that good drivers could save up to $400 on a policy by switching, with drivers in some states saving $1,800 or more.

Of course, the amount you can save varies depending on driving record, age, mileage, etc. “Shop and compare to see how much you can save,” says Ruiz. Prices can vary widely within markets depending on which insurer you call, which is why Giusti says, “Don’t take the first quote you get. By switching insurance companies, it’s not unusual for someone to save several hundred dollars a year just by changing who you write your premium check to. (You can see the lowest auto insurance rates you might qualify for here.)