By: Advocate Brokerage
While your premium is highly individual and depends on a variety of factors including the type of vehicle you drive, your driving record, and the coverage you choose, it is important to keep in mind that even if you don’t file a claim, an increase in the number of claims from other drivers can boost auto insurance rates for everyone.
In fact, a recent report from Insurify stated that the average yearly auto premium increased around 17% in 2022 and predictions for 2023 are that they could climb an additional 12%.
Auto insurance premiums could climb 12% in 2023
In 2020, there was an unprecedented reduction in driving levels because households stopped commuting daily to work and school. As a result, there were fewer claims filed. We even saw several insurance companies refunding some premiums to policyholders. When we returned to pre-pandemic driving patterns, there was an increase in auto insurance claims. This is one of the factors that cause insurance carriers to increase premiums.
You may be wondering if there are other factors causing car insurance rates. The answer is yes, the increases we are seeing can be attributed to several other factors including inflation, an increase in the cost of repairs, supply chain issues, and a shortage of skilled laborers.
We’ll discuss these along with thoughts on what you can do to keep your insurance premiums as low as possible below.
Perhaps the biggest factor (outside of an increase in the number of claims being filed) affecting car insurance premium increase is INFLATION. In the decade prior to the pandemic, new car prices only increased an average of 3% annually, however between 2020 and 2021 prices soared by nearly 17% (according to a report from the Zebra).
Vehicles are also much more complex, which means that when it comes to fixing cars after an accident, even a small incident can cause thousands of dollars’ worth of damage to delicate electronics. Additionally, if the accident results in injuries, the medical costs to treat the physical damage are likely to be greater than what they were in previous years.
Supply chain issues are another factor contributing to the rising costs of buying or repairing an automobile. The recent demand for vehicles has led to a semiconductor chip shortage. Semiconductors, are used in a wide array of vehicle applications, including driver assistance systems, entertainment systems and electronic mechanisms. A lack of supply has left thousands of vehicles are sitting unusable while they wait for chips to come in and there are predictions that this shortage could continue into 2024.
Although the statistics coming from the Bureau of Labor Statistics reports that unemployment is nearly back to pre-pandemic levels, many companies are still struggling to find skilled workers. When fewer people are available to do any given job, including vehicle repair, pay rates often increase as an incentive to hire skilled laborers.
Talking with an insurance specialist like the ones at Advocate Brokerage about your unique insurance circumstances is likely the best way to understand how your policy is priced and what you can expect for the future. We are always happy to answer any questions you may have! Feel free to get in touch with us at 914-723-7100 at any time!