Aside from a handful of exotic and low-volume specialty cars, the value of most personal vehicles declines the minute you drive them off the dealer lot. So, if your car or truck is constantly depreciating, shouldn’t it cost less to insure every year? Instead, many drivers see their car insurance rates go up at annual renewal time, which can typically be due to one or more of the following factors:
- The driver or someone on their policy received a ticket or had an accident claim.
- A driver or vehicle was added to their policy.
- They moved into or closer to an urban area, which generally is more heavily trafficked, or to a location that increased their daily commute.
- They changed or upgraded their insurance coverage.
However, we know that many drivers may be looking at this list and thinking that none of these situations applies to them, and yet they’ve experienced fairly substantial car insurance rate increases over the past several years. Unfortunately, the upward trend of car insurance premiums doesn’t look like it will end anytime soon. Across the U.S., car insurance rates are expected to increase by 8.4% in 2023, which is the largest rate increase in the past six years.
The team at Fred C. Church is here to help you understand why almost every insurance company is feeling the pressure to raise car insurance rates right now. In addition, we want to share ways you may be able to get the same high-quality coverage you have now—or better—at a more budget-friendly premium.
Why Are Car Insurance Rates Increasing So Dramatically?
When the number of car insurance claims rises sharply, and the expense to resolve these claims escalates greatly, insurance companies experience higher-than-normal loss costs, which ultimately leads to rate increases for car owners. This is precisely what is currently going on in the car insurance marketplace.
There are three main reasons why there are costlier car insurance claims, and more of them, than ever before:
1. Many drivers have returned to the roadways, heightening the risk of a car accident.
Now that we are three years removed from the start of the pandemic, most people have returned to more regularity in both their work and personal life. Those employees who may have been working remotely for a period of time are now heading into the office most days. In addition, more people are comfortable with travel again, so the vacation road trip is back in business. In fact, overall driving and traffic patterns are nearly what they were pre-pandemic. In general, this is all good news—unless you’re an insurance company. With more vehicles on the road, especially during the daily commute, the risk of a car accident has increased and insurers are seeing a much higher volume of car insurance claims.
2. Lack of inventory and supply chain challenges are causing both new and used vehicle prices to skyrocket. The auto industry was one of the hardest hit by pandemic-related supply chain disruptions, and it’s been one of the slowest to recover. Many new and used dealer lots remain eerily empty, and even the most common repair parts, like brake pads and rotors, batteries, filters, and tires, are taking much longer for technicians to source. Unfortunately, when there is strong consumer demand but minimal supply, prices are going to get inflated. The scarcity of vehicles and their replacement parts, not to mention higher inflation, has driven up the average sticker price for a new vehicle by 11.4% and for a used car or truck by 7.1%, while motor vehicle parts and equipment prices increased by an average of 14.9%. This pricing change means that insurance companies are paying out much larger amounts for every car insurance claim they receive. As a result, many insurers are raising car insurance premiums to ensure they can cover the cost to repair or replace a damaged or totaled vehicle.
3. As extreme weather systems strike with more force and frequency, the risk of widespread property damage to vehicles has risen. If you own a home, you may have heard that one of the main reasons home insurance rates are going up in 2023 is due to the increasing number of climate-related disasters and the havoc they cause to homes. Well, these weather extremes are also a contributing factor to climbing car insurance rates. From hurricanes and tornados to flooding, fallen trees, and more, car insurance companies are being forced to prepare for the higher risk of damage to vehicles resulting from more frequent and extreme climate events by raising car insurance rates.
Drivers really don’t have much control over any of these three factors. As a result, some people may be tempted to try to offset a higher car insurance premium by increasing their deductible or changing their coverage to the minimums required by their state. However, this can be risky if you end up getting in a car accident—and may end up costing you more in the long run. Fred C. Church would like to try to find a smarter and safer way to get you a more competitive rate.
How Can Fred C. Church Help You Save Money on Your Car Insurance?
Our team is here to assist you in many ways, including evaluating your car insurance coverage requirements, identifying any gaps in your current insurance, and helping you secure better coverage, if needed.
But there is another really good reason to reach out to Fred C. Church today. Whether you’ve already experienced a hike in your car insurance premium or you’re anticipating one at renewal time, we might be able to help you find ways to reduce the hit to your budget.
We work with many of the top national and regional insurance companies, so we can compare your current auto insurance coverage and premium to what we might be able to access for you through another insurer in our network.
In addition, as we review your car insurance policy, we will check to see if you’re taking advantage of all the discounts and credits you may qualify to receive, including:
We will also help you explore your eligibility for car insurance endorsements such as Accident Forgiveness, Loan/Lease Gap, and Disappearing Deductible. When added to your car insurance policy, these coverage options may save you money by minimizing the financial consequences if you are in a car accident.
If you have more questions about your car insurance policy, including your premium, coverage, discounts, or endorsements, we have the answers, so please give us a call. Remember, you can ask us anything.