Auto insurance

A perfect storm of price hikes means higher car insurance premiums | News

ANDERSON – Skyrocketing gas prices aren’t the only reason it’s becoming more expensive than ever to drive a car.

As manufacturers, repair shops and other industry stakeholders grapple with rising prices for parts and labor, these costs have, in many cases, made their way to the consumer premium notice.

“We’re seeing inflation affect the cost of everything, and insurance is one of them,” said Rod Griffin, senior director of education and consumer advocacy at Experian, a major credit reporting firm. .

“When you look at things like the cost of replacement parts, things like low inventory – demand is high but supply is low – all of those things affect the replacement cost that insurance companies have to pass on to the consumer.”

According to research by Bankrate, an independent publisher and comparison service, the average American driver can expect to pay $1,655 this year for comprehensive auto insurance. Some industry surveys indicate that insurers could increase rates by 6% to 10% to mitigate costs related to the pandemic, supply chain disruptions and other factors.

Those increases are, at least in part, due to inflation, which, according to Moody’s Analytics, caused the average U.S. household to shell out an additional $276 per month for goods and services in February.

Looking at factors that could be linked to increases in auto insurance premiums, experts point out that there have been widespread cost increases for almost everything that goes into making and maintaining a vehicle.

“Just go back five years and you’ll see cars are more expensive now,” said Rick Davidson, an independent insurance agent in Alexandria. “It’s incredibly more expensive, if you bought something in 2015, 2016, just to go out and replace that vehicle now.”

Davidson said that in addition to difficulty obtaining needed parts, many repair shops struggle to keep qualified technicians on staff, with competitive wages in other industries luring some workers away from the profession.

Also, he noted, the incentives and discounts that many companies applied to customer accounts at the height of the pandemic — when businesses closed and many workers started working remotely — have run out. . Even so, he hasn’t seen many drastic bonus increases in his business.

“It would make my job really difficult if I had to justify a 15, 20% (rate) hike every six months.”

In addition to shopping around and comparing rates, consumers can take steps to protect themselves from the worst increases.

Experian’s Griffin said that in addition to considering reducing coverage, consumers should take note of programs offered by insurance companies that offer discounts or reduced premiums.

For example, he said, programs that require tracking devices to be attached to vehicles can offer deep discounts — if customers are willing to let their driving habits be tracked.

“If you don’t pull away from stop signs and overshoot too quickly, it can help save you money.”

Further reductions can be achieved by encouraging student drivers to maintain their ratings, he added.

Additionally, more insurers are taking credit scores into account when setting premiums, so in some cases motorists can lower their rates over time by listing regular household expenses like bills. utility and phone bills — and even ongoing service charges — on self-pay accounts.

In addition to paying the credit card bill on time, these positive markers can add up and translate into savings, Griffin said.

“You can proactively add this positive information, and it could help improve your scores, which could also lead to lower rates,” he said. “You want to use the tools at your disposal to do everything you can.”