Why Is Auto Insurance Premium Going Up in 2023
If you're like most people, you're probably wondering:
Why are car insurance rates increasing?
Is there anything I can do to reduce the cost of my auto insurance?
We'll go over market factors, how to lower your auto insurance rate, and how optional coverage packages can help reduce out-of-pocket expenses in the event of a claim.
Why Are Car Insurance Rates Increasing?
There are numerous reasons for the current market-wide increase in auto insurance rates. Here are a few notable examples:
Driving Habits in Pandemic and Post-Pandemic Situations
People began staying at home due to the pandemic in early 2020. They were driving less in general, which resulted in fewer accidents. People began returning to pre-pandemic behaviors such as driving more frequently in 2021. More cars on the road almost always means more accidents. In addition, the severity of automobile accidents has increased.
Vehicle Value Increase
Another factor influencing the auto insurance market is the rising value of most vehicles, both new and used. In fact, used car prices have increased by 26.4%, while new car prices have increased by 9.8%.
What is the source of this? Demand for cars, SUVs, and trucks — and their parts — has increased at a time when supply is decreasing, as has many other price increases in the United States and around the world today.
People still want new cars for the same reasons they have always wanted them:
Replacing worn-out vehicles.
Increasing the size of one's family.
Car enthusiasts indulge their passions.
Furthermore, many of the people who moved out of cities and into suburbs and rural areas during the pandemic now require automobiles for transportation. This has created a new type of demand in addition to the traditional reasons people buy new cars.
Vehicle supply is down in large part due to a manufacturing interruption during the pandemic of key materials such as semiconductors, which are required for the computers found in today's automobiles. Despite the fact that manufacturing has resumed, current supply continues to fall short of existing and pent-up demand. In addition, countless new cars and components to build them, like many other products imported into the United States, are sitting on ships and docks, waiting to be trucked to dealerships and factories across the country.
Repairs and replacements become more expensive as cars and parts become more expensive. As of October 2022, the average cost of a car insurance claim had risen by 20%, while the cost of parts had risen by 6%. Another factor influencing the auto insurance market.
Additional Factors That May Influence Auto Insurance Rates
Other factors that are not related to national or global events may raise your auto insurance rates:
If you've made claims on your auto insurance policy within the last year.
If you or any of your policyholders received a speeding ticket or other driving citation.
A higher number of claims in your area suggests that there may be more accidents caused by weather changes, higher theft rates, more vandalism incidents, or other issues that the insurer must cover.
If you relocated to a higher-risk area than where you previously lived.
You may have previously taken advantage of auto insurance discounts that you no longer qualify for.
What You Can Do to Lower Your Auto Insurance Premiums
While some insurance price increases are uncontrollable, there are steps you can take to help keep them in check.
Maintain safe and responsible driving habits. Make certain that everyone on your policy follows all traffic laws and drives cautiously, especially in difficult or inclement weather. This will help you avoid tickets and accidents, which could raise your premiums.
Sign up for telematics. If you and the people on your policy drive safely and carefully, why not use it to save money? Telematics collects information about your driving habits in real time. By enrolling in a telematics program, you could save on your car insurance policy’s first term. At renewal, safe driving habits can lead to savings, though riskier driving habits may result in a higher premium.
Change your preferences to be a digital customer. There can be a reduction in premiums for customers who engage digitally. These savings are given to customers who enroll in paperless and register with the carrier’s application.
Examine the coverage. If you haven't recently reviewed your auto insurance and other coverage, do so with your insurance agent. They may discover that you are carrying unnecessary or redundant protection. They may also be able to offer suggestions on how to make your coverage more affordable.
Increase your auto insurance deductible. Increasing your deductible can frequently help lower your premiums. However, keep in mind that you will be responsible for the deductible out of pocket and must always have enough cash on hand to cover it if you need to file a claim.
Look for bargains. Check to see if you are eligible for multi-policy, EFT (Electronic Funds Transfer), or Good Student discounts. You can save money by working with an independent agent or a Travelers representative.