Why Auto Insurance Premiums Are Still Rising
We know how hard it is to see your auto insurance premiums rise when inflation has eased, and at LBP Insurance, we genuinely empathize with our clients. It’s frustrating to feel like you’re paying more for the same coverage. In this second part of our 3-part series, we’ll explain why your premiums are still climbing, from the cost of advanced vehicle repairs to more accidents on the roads. We also want to share an important tip: switching to a different carrier for a small savings isn’t always the best choice. While it may seem like a good idea, each policy is different, and you may lose out on important benefits like deductible rewards or higher coverage limits.
Let’s break down why these rate hikes are happening and how you can make sure you’re not leaving something valuable on the table.
Check out Part 1 on Commercial Insurance and look for Part 3 on Homeowners Insurance over the next few days.
Why Are Auto Insurance Premiums Rising?
In recent years, many drivers have noticed higher auto insurance premiums, even as inflation has slowed. Here are some key reasons why this is happening:
1. Higher Repair Costs
Modern vehicles come equipped with advanced technology and sophisticated parts that make them safer but also much more expensive to repair. For example, modern sensors, cameras, and electronic systems in cars have made repairs more costly. According to industry reports, repair costs have increased by 43% over the last few years, primarily due to these advanced systems . If your car needs repairs after an accident, insurers may need to pay significantly more than before, which raises premiums.
2. Increased Frequency of Accidents
The pandemic resulted in a decrease in traffic during lockdowns, but as people returned to the roads, accident rates increased. In fact, many drivers have resumed riskier driving behaviors, such as speeding, distracted driving, and driving under the influence. These behaviors have led to higher accident claims, contributing to the rising costs of auto insurance premiums .
3. Inflation of Auto Parts and Labor Costs
The auto industry continues to face supply chain disruptions, especially regarding key components like microchips used in vehicles. This shortage has caused a spike in the prices of cars, parts, and repairs. Additionally, labor shortages in auto repair shops have led to longer repair times and higher costs, which ultimately push premiums higher .
4. Climate Change and Severe Weather
Extreme weather events, such as hailstorms, floods, and tornadoes, have increased vehicle damage claims. For example, cars caught in severe weather or floods are often written off, and insurers have to increase premiums to cover these rising claims costs .
What Can You Do?
Consider bundling your auto insurance with other policies, increasing deductibles, and reviewing your coverage to ensure you're not overpaying for extras you don’t need. As an independent agency, LBP Insurance can help you compare policies and find the most affordable options without compromising your coverage. Contact us today!