According to recent figures from the U.S. Bureau of Labor Statistics, car insurance premiums have risen 17% nationwide over the past year.
So, if you feel like you are paying too much for car insurance, you're not alone. Here are a few reasons the cost of auto insurance is soaring.
Resolve $10,000 or more of your debt
Credit card debt is suffocating. It constantly weighs on your mind and controls every choice you make. You can end up emotionally and even physically drained from it. And even though you make regular payments, it feels like you can never make any progress because of the interest.
National Debt Relief could help you resolve your credit card debt with an affordable plan that works for you. Just tell them your situation, then find out your debt relief options.
How to get National Debt Relief to help you resolve your debt: Sign up for a free debt assessment here. (Do not skip this step!) By signing up for a free assessment, National Debt Relief can assist you in settling your debt, but only if you schedule the assessment.
Inflation is everywhere
Inflation has caused the cost of just about everything to rise. Those rising costs find their way into your car insurance premiums.
Many of the issues you'll see on this list are contributing to higher costs throughout the economy. Even something as seemingly good as higher wages for auto mechanics helps to drive up your car insurance costs.
As higher costs everywhere add up, insurers have little choice but to pass them on to customers. That makes it more difficult for policyholders to get ahead financially.
Today’s cars have higher values
In recent years, issues with semiconductors and other supply chain woes have made it more difficult to get cars to market. That lack of new inventory has helped to push car prices higher.
In fact, there's only one new car in the U.S. market, the Mitsubishi Mirage, with a starting price of less than $20,000.
An expensive car is costly to fix or replace, and car insurance premiums have risen to reflect that change.
Climate change might be contributing to more claims
Dramatic weather events many experts link to climate change can cause more damage to cars, leading to a rise in claims.
Hurricanes, flooding, tornadoes, and other extreme weather events put cars at a higher risk of being damaged. Higher risks mean insurance companies raise the cost to cover such events.
Earn $200 cash rewards bonus with this incredible card
There's a credit card that's making waves with its amazing bonus and benefits. The Wells Fargo Active Cash® Card(Rates and fees) has no annual fee and you can earn $200 after spending $500 in purchases in the first 3 months.
The Active Cash Card puts cash back into your wallet. Cardholders can earn unlimited 2% cash rewards on purchases — easy! That's one of the best cash rewards options available.
This card also offers an intro APR of 0% for 15 months from account opening on purchases and qualifying balance transfers (then 20.24%, 25.24%, or 29.99% Variable). Which is great for someone who wants a break from high interest rates, while still earning rewards.
The best part? There's no annual fee.
Reinsurance rates are climbing
Reinsurers protect insurance companies. In essence, they provide insurance to insurers. Unfortunately, reinsurance rates have been rising to cover the cost of rising claims.
As your insurance company’s reinsurance rates rise, it might try to recoup these costs through higher insurance premiums.
Accidents are rising
The COVID-19 pandemic temporarily pushed many drivers off the roads and into work-from-home setups.
But as workers have returned to the nation’s highways, accidents have increased. More accidents means a greater number of claims — and higher insurance rates.
Electric vehicles cost more to fix
There's a push in America to protect the environment by moving more people into electric vehicles.
However, EVs have some downsides. The vehicles are more complex, making them more expensive to repair. Insurance companies recoup those higher repair costs through bigger premiums.
Vehicles have gotten bigger
Today’s drivers often choose bigger SUVs or trucks instead of sedans. The top three best-selling vehicles in the U.S. last year were pickup trucks, according to Car and Driver.
Bigger vehicles can be more expensive to fix and may cause more damaging accidents. Those factors help contribute to increased insurance costs.
Used cars have become much more expensive
As the supply of used cars has dried up, the inventory remaining on car lots has gotten more expensive. The cost of used cars can sometimes even rival the price of a new vehicle.
With the value of used cars soaring, insurance premiums assigned to them also are climbing.
Today’s cars have more advanced features
Cars are becoming more advanced every day. This includes the advent of navigation features, heads-up displays, phone connectivity, additional airbags, and other safety features.
However, those advanced features also cost more money to replace if you’re in an accident. As a result, insurance companies must increase premiums to cover these features.
Repairs cost more money
It’s not just the price of a car that's increased in recent years due to inflation. The cost of parts and labor has also risen, which means getting parts and fixing your vehicle is more expensive than it used to be.
Insurance companies have to cover those extra costs, so they raise rates in anticipation of any repairs. That reality is another reason why today’s car owners are finding it more difficult to keep more money in the bank.
Buying a new or used car can be frustrating once you factor in additional rising costs such as gas, maintenance, or insurance.
Before you buy your next vehicle, shop around to find the best car insurance options at an affordable price. Doing so can help you avoid wasting money during these trying times.