Auto insurance

Inflation leaving you underinsured?

Many drivers are affected by higher car insurance rates. But not only does inflation drive up the cost of insurance, it can also mean you’re underinsured.

Drivers feel it.


“My car insurance, my home insurance, my health insurance, all of that has gone up,” driver Carolyn Wagner said.

“We changed insurance companies probably three times,” drivers Patrick and Lisa Bennett said. “Yeah, four years and no accidents, so we wonder why it’s so high?”

Bankrate reports that car insurance rates have increased by an average of 8%.

“The cost of medical care as a result of the claim, the cost of vehicle parts and equipment, labor and all of that goes up,” said Bankrate analyst Cate Deventer.


Not only are insurance rates higher, Deventer says, high inflation can mean some drivers are underinsured. Here’s why.

The consumer price index indicates that medical care has increased by 5.1% over the past year. This means a 5% increase in the costs that your bodily injury liability, bodily injury protection, and uninsured and underinsured motorist coverage may have to cover in the event of an accident.

“The main group of people this affects are those with minimal state coverage. So in 2020, the Insurance Information Institute said the average personal injury claim, the damage you cause to others, was around $20,000, and that’s two years ago now,” Deventer said.

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Additionally, prices for new cars jumped 10% from a year ago, and used cars rose 6%. Shortages of parts and labor increased repair costs.

Deventer says some drivers may want to take their property damage liability, comprehensive coverage and uninsured motorist property coverage to the next level.

“It won’t add much to that cost to increase the liability limit. We’ve found that going from the state’s minimum coverage to what’s considered the next level of liability coverage is typically $7 per month” , said Deventer.

Seven dollars, she says, that could help protect your wallet from a serious wreck.

Here are some tips for saving money on auto insurance:

– Shop around by getting quotes from other carriers

– Increase your deductibles

– Ask for discounts, such as safe driver discounts and paperless billing

– And use telematics, which allows your insurer to track your driving via an app or device in your vehicle, which may result in a discount for safe driving