Summary:
Car insurance rates have surged more than 22% over the past year, turning it into a significant factor driving inflation. This increase means a monthly premium of $150 has jumped to around $183, impacting many drivers’ budgets despite wage increases. Maya Afilalo, a Senior Editor and Analyst at AutoInsurance.com, explains that this rate hike is due to several factors.
Firstly, insurance companies are experiencing higher claims costs, necessitating increased premiums to maintain profitability. Accidents are becoming more frequent and severe, partly due to larger vehicles and rising road rage. Distracted driving has further exacerbated the situation, leading to more costly accidents. Additionally, the frequency of severe weather events, driven by climate change, is causing increased vehicle damage from natural disasters.
The cost of car repairs and parts has also risen due to pandemic-related supply chain issues and a vehicle shortage. Modern cars with advanced technology, such as integrated safety devices and sensors, are more expensive to repair, leading to higher insurance payouts. Rising medical expenses and extended claim processing times add to the overall costs, contributing to higher premiums.
To lower insurance rates, drivers can take several steps: shop around for different providers, increase deductibles, consider usage-based insurance programs, bundle home and auto policies, drop non-essential coverages, and adjust liability limits.
Factors affecting insurance rates include driving history, location, coverage choices, and vehicle type. Urban areas, high-risk vehicles, and more extensive coverage options generally lead to higher premiums.
For those seeking to understand or reduce their rates, comparing quotes from multiple insurers or working with an independent agency can be beneficial. Liability insurance is mandatory in most states, with varying requirements for additional coverage based on state laws.
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