Why We're Seeing Increasing Auto Rates & How To Offset The Cost

October 06, 2022

Why we're seeing increasing auto rates

A number of pandemic-related trends are driving up auto insurance rates throughout the industry and across the nation. Inflation has possibly had the biggest impact — as the cost of goods and services goes up, so too does the cost of insurance protection on the road. Here's a more in-depth look at these trends and how they impact car insurance rates.

Repairing & Replacing Vehicles Costs More

The auto industry has seen its share of labor shortages and supply chain disruptions over the year. Strained supply chains have caused prices for auto parts and vehicles to spike dramatically. According to the Consumer Price Index News Release 9.13.2022, from August 2021 to August 2022, the cost of new vehicles has increased by 10.1%, used vehicles’ cost has increased by 7.8%, and vehicle maintenance & repair have increased by 9.1%.   

As repair costs go up, the amount insurers pay to fix their customers' vehicles also goes up. Likewise, as vehicle values rise, insurers pay more to help replace their customers' totaled cars and trucks, all of which increase the cost of auto insurance.

Accidents Are Increasing Leading to More Claims

Deaths from car crashes in the first few months of this year hit the highest quarterly total since 2002, according to the National Highway Traffic Safety Administration. Traffic deaths were up by 7% compared to the first quarter of 2021, and last year's auto deaths were already at a 15-year high.[1]

Changes in driving behavior are also impacting insurance rates. The number of car accidents has gone up, leading to more insurance claims. This higher claim volume, coupled with higher vehicle repair and replacement costs, is ultimately what's driving insurance rates up throughout the industry.

Ways to Save: How You Can Lower Your Insurance Rate

  • See if your company offers Telematics. “That which we call a rose by any other word would smell as sweet.”[2]  That quote certainly applies when it comes to telematics as insurance companies all have different names for their telematics program. Telematics is a method of monitoring vehicles by using GPS technology and onboard diagnostics (OBD) to personalize your car insurance rate based on your driving habits. The safer you drive, the more you could save, and with some carriers, this savings could be sweet. 
  • Explore your payment options.  Paying in full or setting up automatic payments can easily save you more with the discount they provide. 
  • Maintain good credit.  Many insurers use credit-based insurance scores to calculate car insurance rates. Generally speaking, a better credit-based insurance score means a better rate. And no, getting a quote will not impact your actual credit score.
  • Ask your agent about packaging or bundling your homeowners and auto insurance policies. Many companies provide a packaging discount which can save you big bucks.
  •  Ask your agent about discountsSee what auto insurance discounts you are eligible for that you aren’t taking advantage of yet. 
  • And, of course, drive safely.

[1] NHTSA Crash Stats

[2] Romeo and Juliet, spoken by Juliet Capulet (Act 2, Scene 2) by William Shakespeare