If you have checked your automobile insurance quotes recently, you may have been surprised to see that the auto insurance premiums are rising. The latest government numbers have shown consumer price rises 6.4%, which is a decline from the previous year. However, when it comes to auto insurance, prices are still surging even more, up nearly 15%. This is mainly due to the insurers facing higher costs with more expensive car repairs, medical inflation, and more dangerous driving in general.
According to data from the National Highway Traffic Safety Administration (NHTSA), mid 2020 saw a significant increase in crash fatalities as citizens began to return to the roads after months of the lockdowns due to the Covid-19 pandemic. This was the beginning of a seven quarter streak of year-to-year increases in road fatalities. While the fatalities have declined int he last two quarters, the current data still shows that people are dying from crashes at a higher rate since before the pandemic. In just the first nine months of 2022, the NHTSA had reported an astounding 31,785 fatalities, which is significantly higher than the 27,019 number of fatalities during this same period of 2019.
Further reports from Carrier Management, which is an information service used by the insurance industry, theorized that drivers had gotten used to traveling at higher speeds on the empty roads. These high speeds continued even when more cars entered the roads, hence the higher number of fatalities. This higher number of fatalities is a major reason for the higher auto insurance bills. The new bills are the opposite from 2020, as insurers were returning billions of dollars to drivers as the accident occurrence was so low.
One of the other main reasons as to why auto insurance costs were rising are due to the car repair bills increasing as well. The cars are continuously being more sophisticated, meaning they will cost more to fix when the drivers get into accidents. Carrier Management had noted that the issue may have been offset by better safety measures in these new cars, but it is still an issue that the insurers have to address. Furthermore, the shortage of car parts and higher labor costs also lead to the higher vehicle repair costs.
Further issues the auto insurance companies are fighting with is the cost of medical care services. While the current inflation for medical care services was at 2.1% for the past year, it was at 6.5% on the annual basis in September, according to CPI data. According to this data, the prices today are significantly higher than they were a few years ago, meaning the auto insurers have to pay more for injuries due to accidents. For example, State Farm had reported a record underwriting losses in the auto insurance business for 2022.
The final reason for the rising car premiums is actually the claims that are tied up in court. A majority of claims going through to the carriers are through the attorney, which means that a claim that could have been shut down quickly is now tied up in court, with higher expenses.
A new report from Bankrate.com, found that nationwide premiums have risen more than $240 on average, which tops $2,000 a year. Drivers in Florida have seen the biggest increase in premiums, up nearly twice that amount to roughly $3,200 a year. Unfortunately, rates are likely to continue to climb, and will get worse before they get better.
There are a number of different reasons as to why the auto insurance premiums are on the rise. These reasons include increasing medical costs, claims being held up in courts, increasingly reckless driving, expensive vehicles, and even higher auto repair costs. If you are upset with your car insurance premium, drivers are more than welcome to shop around for a new lower insurance premium. Individuals are even able to call their insurance agent to ensure they are taking advantage of all available discounts.
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