A number of recent trends have caused insurance rates to increase across the industry. Inflation has likely had the most significant impact — as the cost of goods and services rose, so did the cost of protecting our customers on the road. Here’s a detailed look at some relevant trends and how they can affect car insurance rates.
Why Auto Insurance Rates Are Increasing
Repairing and Replacing Vehicles Costs More
The auto industry has faced labor shortages and supply chain disruptions over the past few years. According to the TechForce Foundation in 2021, the demand for transportation technicians outpaced supply by an estimated 5 to 1, leading to higher labor costs. The Foundation’s 2022 Technician Supply & Demand Report showed that the gap continued to widen, with the supply of graduating automotive technicians dropping by 11.8%.
Supply chain issues also caused prices for auto parts and vehicles to rise dramatically. These factors collectively led to a significant increase in vehicle repair and maintenance costs: up 12.7% from July 2022 to July 2023, as reported by the Bureau of Labor Statistics. This followed increases of 4.1% from 2021 and 8.1% from 2022 for the same months.
On a positive note, while used vehicle prices spiked in recent years (up to a 41.2% increase from February 2021 to February 2022), they have since started to decrease (down 5.6% from July 2022 to July 2023).
However, as overall car repair costs rose in recent years, the amount insurers pay to fix vehicles also increased. Similarly, as vehicle values rose, insurers paid more to replace their customers’ totaled cars and trucks, driving up the cost of auto insurance.
Increased Accidents Lead to More Claim Costs
The number and severity of car accidents have increased in recent years, resulting in more and costlier insurance claims. This, along with higher vehicle repair and replacement costs, drove insurance rates up across the industry. However, the National Highway Traffic Safety Administration’s early 2023 data estimates show that car accident fatalities are beginning to decrease after two years of significant increases.
Learn why your insurance rate could go up based on your specific circumstances.
Storm Damage is More Severe
According to the National Centers for Environmental Information, the frequency of costly weather events has increased in recent decades. In the 1980s, the U.S. averaged 3.3 weather events per year that exceeded $1 billion in damages and costs. In the 2010s, that number jumped to 13 events per year. Over the last three years, we’ve averaged 20 per year. These increases in storm damage have led to more and more expensive storm-related insurance claims, potentially raising insurance rates as the expected costs for future storm-related claims rise.
There are many factors that can affect your car insurance rate. If you have questions about a recent rate increase, please contact us. We’ll answer your questions and help you find ways to save on your NavSav auto insurance policy. Learn more about our auto insurance options.
