From groceries to gas, prices seem to be going up everywhere you look these days. And auto insurance is no exception.
During the height of the coronavirus pandemic, drivers got a slight break on their rates, but many are reporting significant hikes in payments – with increases ranging from 3% to 12% across various carriers, according to November 2021 data from S&P Global Market Intelligence.
(The good news? You can do something about it. We’re ready to help – get started!)
So why exactly the increase? To cruise through the confusion, let’s look at some top factors.
Simply put, there are more accidents now. Cars have been getting safer over the past half century (think antilock brakes and electronic stability controls that “know” when you’re skidding) which paid off in a reduced accident rate – for a while.
Outside of the pandemic, which caused people to drive much less, the accident rate has been trending up for years, thanks to:
More cars on the road: Americans drove 32% more miles in March, April and May of 2021 compared to the same period in 2020. More cars on the road equals more accidents and ultimately more claims for insurers.
Distracted drivers: As smart phones conquer the world, more drivers are paying attention to something other than the road. (We’re looking at you, Facebook. But not behind the wheel.)
Severe weather conditions: Worsening weather patterns from record tornados to inordinate flooding to significant storms drive up auto premiums through a spike in “catastrophe” claims.
“Claim severity” is on the rise. Untangling the terminology, that’s what it costs your insurance company to pay off your claim. In other words, there are not only more accidents now, they’re high-ticket items.
Body work: Both new and used vehicles are pricy to fix in their own ways. The bells and whistles that make your new car safer are expensive to replace, while used vehicles are difficult to repair due to hard-to-source parts.
Medical costs: Unfortunately, medical costs also continue to rise. That means it’s more expensive to pay off bodily injury claims.
Litigation: More people are lawyering up to settle their claims – which can result in higher payouts.
You’re familiar with your credit score, but you may not know you have an insurance score as well.
When you’re looking to buy a new policy, carriers pull reports that include an insurance score determined by payment history, how long you’ve been with your current carrier, lapses in coverage and credit score. A lower score tells insurance companies that you’re more of a risk.
The pandemic didn’t just impact millions of families’ abilities to pay their bills, it dinged their credit and insurance scores as well. And customers with less-than-ideal scores find it more difficult to get a good rate.
You may be overpaying for auto insurance now and have opportunities to find a better value.
Comparison shop: When your policy is expiring, don’t automatically renew – look for a better deal from another carrier. (Full disclosure: we specialize in helping drivers shop multiple carriers to save time, money and energy.)
Take advantage of discounts: Many drivers don’t know about all of the discounts they may qualify for. Depending on the carrier, these include price breaks for being a good student or safe driver, owning and insuring your own home or not having an accident for five years.
Bundle auto and home coverage together: Many carriers offer nice savings for bundling auto and home coverage together. (Bonus: you can manage two important policies in one place.)
Of course, the best way to keep your rates from rising is by doing everything you can to stay out of accidents in the first place:
Maintain your car: Follow the check-up schedule recommended for your vehicle and choose a reliable mechanic.
Drive like a boss: Did you know that only 2% of all auto accidents can be solely attributed to a bad car? The vast majority are driver fouls. So stay in control behind the wheel – and watch out for others who aren't.
Finally, it’s important to look at more than just your rate when you’re determining the financial value of an auto insurance policy. A lower rate paired with insufficient levels of coverage could mean having to pay a big bill out of pocket. It’s no fun to think about, but if you cause a serious accident and lose a lawsuit, you might have to raid:
Your equity (home, property, valuables)
Your future earnings (yes, that happens)
Your smartest money move is finding a policy that has the right balance of affordable price and dependable coverage. Achieving overall financial wellness encompasses more than just your insurance coverage, of course – but it shouldn’t take a back seat.
Whether you’re shopping for a new auto insurance policy or want to improve on what you have now, we’re here to help with expert guidance and quotes in minutes from leading carriers. We look forward to helping you find the best combination of coverage and price for your needs.