Auto insurance premiums in the U.S. are contributing to high inflation, with costs rising significantly.
Factors such as increased car prices, supply chain disruptions, and high demand have led to a surge in insurance rates.
Repair costs and a shortage of mechanics are also driving up expenses.
Matt Colyar, a Moody’s Analytics economist, said, “New- and used-vehicle prices have moderated as dealer lots fill up. Insurance companies, however, are still playing catch-up.”
“Rapid as the increase in insurance costs has been, motor vehicle repair costs are up by even more over that period, suggesting the CPI for motor vehicle insurance has further to rise,” he continued.
Shannon Martin, a Bankrate analyst, said, “While inflation is slowing down, insurance companies are reassessing their risk models to account for the post-pandemic rise in car crashes, the increase of claims from extreme weather and the sustained elevated cost of vehicle repairs.”
“Remember that base rate increases can only be implemented at the renewal period, so some policyholders are still paying for the increase from 2023, and have yet to be hit with potentially higher 2024 rate renewals,” explained Martin.
Elizabeth Renter, data analyst at NerdWallet, added, “If you’ve noticed the sting when renewing your policy recently and haven’t previously been motivated to shop around, now’s a good time.”
She added, “While prices are rising across carriers, you might not be getting the best deal. Auto insurance – like many other mandatory ongoing expenses – is easy to set and forget, but when prices are rising like this, it can pay to get quotes.”
Policyholders are advised to shop around for better deals amid the ongoing price increases.
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