Inflation Forcing Carriers to Raise Auto Rates
We noted before that it takes little effort to recognize the pain of inflation when we stop to pump gas or check out at the grocery store. The increased cost of living has become widespread and continues to rise, from transportation and food to healthcare and housing. It is impossible to escape the reverberating consequences of inflation and rising consumer prices.
Just like the inflated cost of building materials is beginning to affect homeowners premiums, auto insurance rates are also part of that conversation as carriers raise prices to account for unexpected costs.
What a Difference Two Years Can Make!
In spring of 2020, as driving behavior changed at the onset of the COVID crisis, auto insurers began issuing credits and lowering rates.
Two years later, driving behavior has normalized, accidents have increased, claim frequency has escalated, and insurers’ costs have increased significantly. All this, coupled with skyrocketing inflation rates, sees auto insurers substantially underpriced.
According to the Bureau of Labor Statistics, average expenditures for vehicle repairs have risen more than 4 percent over the past year. Used car and truck prices have skyrocketed by more than 40 percent over that same period. Supply chain complications have made for an auto replacement part inventory shortage, delaying the repairing of vehicles, and resulting in longer car rental periods at higher prices.
What Should We Expect Now?
Consequently, auto insurers are looking to pass those costs back to customers, rushing to raise rates — many by up to 8 percent — to make up for losses and get ahead of the continued rising inflation. Some carriers are seeking double-digit increases in an attempt to compensate for higher costs. Rate increases have already taken effect in 11 states since August, 2021. Additional increases in approximately 25 states are expected by end of the first quarter of 2022, with plenty more later in the year.
Ultimately, consumers will be paying the price in the near term as the auto insurance industry adapts to these ill-fated circumstances.
What Can You Do?
There are several different auto insurance discounts and credits available to you that you might not have leveraged.
These include: defensive driving discounts, accident-free and good-driver discounts, safe driver discounts, savings for low mileage and usage, driving performance credits, good-student credits, away-from-home student discounts, senior discounts, bundling/multi-policy discounts, paid-in-full discounts, and loyalty discounts; plus, if your vehicle comes with certain attributes like an anti-theft device, you might qualify for further discounts.
Rest assured that we are here for you. Keeping with our philosophy of “from our family to yours” through four generations, we remain committed to offering you the highest quality protection for the best price. As your trusted agents and advisers, we want to help clear up any confusion and deliver you the peace of mind you crave in challenging and uncertain times such as these.
If you have any questions or would like us to review your current policies and help you get ahead of these changes, please give us a call at 845-986-1177.
At Seely & Durland Insurance. we are your business, home, auto, and life insurance solutions provider, partner, and adviser, serving Warwick, Greenwood Lake, Florida, Pine Island, Goshen, Middletown, Chester, Monroe, Newburgh, Orange County, and the Hudson Valley and Tri-State Area.