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?
Denne historien er fra February 2023-utgaven av Kiplinger's Personal Finance.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent ? Logg på
Denne historien er fra February 2023-utgaven av Kiplinger's Personal Finance.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent? Logg på
MAKING A DIFFERENCE IN THE LIVES OF DISABLED VETERANS
He suffered grave injuries in the line of duty. Now he helps other veterans who have disabilities.
DO YOU NEED UMBRELLA INSURANCE?
A policy can protect you from financially devastating events.
Navigating Finances as a Blended Family
Money matters can get complicated when two families unite. Planning is key.
BREAKING UP WITH YOUR BROKER
Be aware of these challenges when you move your money to a new home.
CHOOSE A MEDICARE PLAN THAT'S RIGHT FOR YOU
Consider your health care needs over the long term as you weigh costs and coverage.
Keep Faith in These Stocks
IN 1997, I coined the phrase “faith-based investing.” It has nothing to do with religion or with picking stocks at random.
OUR ESG PICKS ARE THRIVING
Despite an ongoing backlash, our favorite stocks and funds focused on environmental, social and corporate governance issues had a good year overall.
MONEY MANNERS FOR THE MODERN AGE
The customs for splitting a restaurant check, purchasing a wedding gift, tipping and more have evolved. These guidelines can help.
ELECTION 2024: POLITICS AND YOUR PORTFOLIO
Who wins the White House matters—but only at the margins when it comes to your investments.
YOUR GUIDE TO OPEN ENROLLMENT
With health care costs on the rise, it’s critical to select a plan that fits your needs at the right price.
