What's Driving Higher Auto Insurance Rates?

You may have noticed the cost of basic items at the grocery store are up quite a bit. I just looked back at the cost of eggs before the COVID pandemic. In 2019, I paid just 99 cents for a dozen eggs. That same pack of eggs is now $3.99. Unfortunately, the insurance industry is not immune to these increased prices either and we are seeing higher premiums for auto insurance.

The chip shortage has severely impacted the production of new vehicles. As a result, more people are having to purchase used vehicles which are priced higher than ever before. If you can wait the sometimes months-long wait for a new vehicle, you could be paying less than what a used vehicle costs in the current market. Since used car values are so high, insurance companies are having to pay even more in the event the vehicle is totaled.

If your car is in an accident and needs repairs, you are likely going to wait quite a while for the necessary parts (which are also more expensive now by the way). This means that you will need more, if not all, of your rental car coverage while your vehicle is out of commission. Don’t forget that the body shop is incurring higher than ever labor and parts costs, so they have to pass these costs onto the insurance company to pay.

Apart from the cost of claims going up, the number and severity of claims are both going up as well. Think of Hurricane Ida just last year here in PA and all the cars in the area that were flooded. You certainly heard about the devastation of Hurricane Ian and all the damage it caused. Aside from weather events, more people are speeding and the severity of auto accidents is increasing.

All of these factors lead to more money being paid out by insurance companies and in turn increased rates. We encourage you to call us to review your auto policy with us to ensure you have the appropriate coverages and discuss possible options to offset the higher premiums.