Drivers renewing their auto insurance policies are feeling sticker shock. The October consumer price index found that motor vehicle insurance rates were up 12.9% compared with a year earlier. But this is only an average, so some drivers are facing even steeper hikes.
The auto insurance market, like the rest of the economy, is dealing with the aftermath of a global pandemic and soaring inflation. “Insurers went from record profits in 2020 to record unprofitability,” says Adam Pichon, vice president and general manager of auto insurance at LexisNexis, a data analytics firm. “Many insurers were caught flat-footed and are raising rates to get profitable again.”
There are a few reasons insurers are feeling a squeeze. “In 2020, people were driving less, which led to fewer accidents. Insurers were then able to charge less,” says Laura Longero, executive editor for CarInsurance.com, an auto insurance information and quote website. “Those savings have now gone away.” Accidents have also increased. “The crash rate is higher now versus pre-COVID,” says Longero, though she notes the difference is not astronomical. Also, inflation, supply-chain issues and shortages increased the cost of parts and materials needed for repairs.
When insurers face higher costs, they pass those on to customers through higher rates. But drivers are not taking these rate increases sitting down. Pichon says that in the past two to three months, the steep increase in rates has motivated them to shop for lower-price policies again.
IS IT TIME TO SHOP?
Diese Geschichte stammt aus der February 2023-Ausgabe von Kiplinger's Personal Finance.
Starten Sie Ihre 7-tägige kostenlose Testversion von Magzter GOLD, um auf Tausende kuratierte Premium-Storys sowie über 8.000 Zeitschriften und Zeitungen zuzugreifen.
Bereits Abonnent ? Anmelden
Diese Geschichte stammt aus der February 2023-Ausgabe von Kiplinger's Personal Finance.
Starten Sie Ihre 7-tägige kostenlose Testversion von Magzter GOLD, um auf Tausende kuratierte Premium-Storys sowie über 8.000 Zeitschriften und Zeitungen zuzugreifen.
Bereits Abonnent? Anmelden
FREE HELP FOR COLLEGEBOUND STUDENTS
This program’s mentors assist applicants as they fill out the FAFSA, write essays and more.
WHAT YOU SHOULD KNOW ABOUT SPOUSAL IRAS
You typically need earned income to contribute to an individual retirement account, but a spousal IRA provides an important exception to this rule.
SELLING SHARES? HERE'S HOW TO MINIMIZE TAXES ON YOUR GAINS
ET'S say you've been regularly buying shares in a booming tech company over the past few years, but now you want to start taking some of those profits, perhaps to rebalance your portfolio.
Strategies for Novice Investors
AS part of a lifes kills program for young, single mothers, I was asked to teach a class on how to get on top of your finances.
ANSWERS TO YOUR 529 PLAN QUESTIONS
Thanks to recent policy changes, families have more options for what to do with money sitting in these tax-advantaged accounts.
Rate-Cut Winners and Losers
NOW that the Federal Reserve has cracked the interest rate ice, the next development will be to separate winners from losers.
SHOULD YOU BUY THESE RED-HOT FUNDS?
Covered-call ETFs are popular but come with plenty of caveats.
DIVIDEND STOCKS ARE READY TO REBOUND
Our favorite dividend payers are poised to benefit as falling interest rates lure investors back.
IS A 55+ COMMUNITY RIGHT FOR YOU?
These age-restricted developments appeal to older adults seeking abundant amenities and an active lifestyle.
AT LONG LAST, RATES ARE DROPPING
Consider these portfolio moves now that the Federal Reserve has cut its benchmark interest rate.