The auto insurance market is grappling with multiple changes that resulted in significant premium increases to consumers. In 2023, the insurance industry saw the largest increase in auto insurance costs in the last six years.
What’s Causing Auto Insurance Premium Increases?
Multiple factors drive car insurance premium increases. The industry is currently under financial pressure caused by more frequent and severe weather conditions, a severe labor shortage and a sharp rise in car repair costs.
- Severe weather—Comprehensive auto insurance coverage compensates for damages resulting from acts of nature such as flooding, hailstorms, tornadoes and wildfires, as well as other no collision-related incidents. As extreme weather conditions increase in frequency, insurance claims also rise, affecting the cost of premiums for all policyholders. South Florida had a 1,000-year event in April with 25 inches of rainfall in 24 hours, resulting in more than $100 million in damages. During the same month, 29 tornadoes ravaged the central and southern plains in one day, causing $1.9 billion in damages. Across the U.S., 2022 saw 18 separate billion-dollar weather events. As of August 2023, there have been 15 weather disaster events with losses of more than $1 billion each.
- Labor shortage—The labor shortage is ongoing. Although 4.5 million new jobs were created in 2022, an additional 3 million workers are required to reach pre-pandemic employment levels.
- Rising costs—Inflation affects various sectors, and the car repair business is no exception. The cost of fixing cars surged by 23% in the past 12 months, nearly fourfold compared to the average price increase across the board. Lack of available labor and a scarcity of auto parts were significant contributors to rising costs.
While you can’t control any of these factors, there are still steps you can take to save on your auto insurance premium.
- Combine multiple insurance policies with the same company – You can realize savings on BOTH your home and auto insurance by purchasing both policies from the same carrier.
- Save money by driving less – The number of miles you drive each year can also impact your insurance rate. Be sure you are receiving a discount based on number of miles you travel in a year.
- Look at payment plan discounts – Many carriers offer discounts for paying your policy inf full or signing up for auto payments. In addition, carriers are now offering Marketing partners discounts- you can save by donating to a company sponsored charity.
- Ask about ways to save for your young drivers – Good student, driving training or recognizing an operator away at school are ways to save on your auto policy.
- Consider signing up for an intel driving app – Many carries offer a discount for downloading an app that track how fast you go, how you brake and other driving behaviors.
