Insurance costs are not always a favorite subject. Your auto rates are increasing, but you haven’t had a claim, not even a speeding ticket. Your car is older, but rates continue to climb. These past few years have been trying in many ways, let’s take a quick look at some things that are affecting the price you pay to drive a car.
We all know that driving record, claims, driver age and the type of car you drive affect rates, but what are other things that are having an unusual impact on what you pay.
As of late, our default is to blame the pandemic… but that is actually a good place to start! Insurance companies set their rates upon driving conditions and circumstances. When things change, whether what you can somewhat control or things you cannot, insurance companies increase rates to compensate for that. We had seen a few years of relatively stable rates. When the pandemic hit, a chain of reactions began to unfold. Folks began to drive more as remote work; lack of airline travel and other factors began to change our way of life. As a result of that, since more miles were driven, the number of accidents began to increase, resulting in more dollars being paid our for claims.
Changes continued to take place. There has been a labor shortage of qualified technicians able to restore cars. While remote work is an option in some industries, auto repair does not lend itself to that option. As a result, labor costs began to rise, which has an increased affect on claim cost which are passed on from repair shops to compensate for higher wages.
Another impact has been supply shortages of technical components and repair parts. These shortages have resulted in lengthened time to repair vehicles and increased costs to obtain parts. Lengthened time of repair results in longer need for rental vehicles and increased cost of parts also serves to drive repair costs.
We have all seen empty car lots over the past few years, and only now are they beginning to fill back up. The shortages of supply, increased labor and production slowdowns resulted in higher priced cars as there were just not enough cars to meet demand. Price increases were much more obvious in the used car market as used car prices increased in some cases up to 40%.
It has taken a while, but the combined effect of changes in labor, supply, increased accidents and the cost of putting people back on the road is now being realized. It has taken some time for these changes to trickle down to auto insurers who can now need to adjust rates to keep up with a significant increase in the cost of claims.
While it doesn’t make the pill easier to swallow, a little insight may be helpful in understanding what is happening. This is an important time to truly obtain the best value that can be received through your insurance program. Talk with your agent and review your policies to eliminate duplication as well as to reduce excess coverage for things you don’t need covered. Conversely, we want to talk with you to make certain we have things covered correctly to put you back where you need to be when the time comes which you need us.