According to a recent report from CNN Business, car insurance rates have taken a big jump in the past year: over 19%, the biggest annual increase since 1976. Many Americans are already under financial strain, and runaway inflation hasn’t helped matters.
Cost of living is on the rise across the board, including auto insurance.
Many drivers struggle to keep their vehicles insured thanks to the major surge in premiums. Some even make the dangerous decision to risk going without insurance.
What’s behind this sudden rise in premiums, and will it be even worse next year? Is there anything you can do about it? Luckily, there are answers and a few strategies for dealing with high insurance rates.
What’s Driving Up Car Insurance Rates?
First, it’s important to understand exactly why rates are going up now, and by so much. It comes down to a few factors, many of which are linked.
Inflation is one of the primary culprits, as it has a cascading effect across a number of industries, not merely insurance. As the cost of living goes up, insurers must raise their rates in order to maintain their previous level of profitability.
The rise in repair costs is also linked to inflation. Cars are manufactured with more sophisticated technology than ever before. Inflation, as well as ongoing supply chain issues, make the costs of both parts and labor higher for everyone — meaning payouts can cost a lot more.
Those larger payouts are more common than ever, thanks to a major upsurge in extreme weather events. Disasters such as tornadoes, hurricanes, and flooding all cause major damage to houses and vehicles. Insurers end up passing along the costs to policyholders in the form of higher premiums.
There’s also been a notable rise in distracted driving. Smartphones, HUDs, and other digital distractions make it easier for motorists to take their eyes off the road, dramatically increasing the chance of an accident.
The Consequences of Skyrocketing Premiums
Many families already struggle to make ends meet financially; higher auto insurance premiums are particularly bad news. Not surprisingly, some drivers have chosen to go without auto insurance entirely, in the hopes that they won’t get in an accident and can put that money to better use elsewhere.
Unfortunately, going without insurance isn’t a viable solution. In most states in the U.S., it’s a criminal offense to go without car insurance. Fines and penalties face those caught — even jail time for repeat offenders. Being caught driving without insurance could also make you unable to find reasonably priced insurance in the future.
It’s also worth mentioning that uninsured drivers further contribute to higher premiums when insurance companies have to pay out for both parties if an uninsured driver is in an accident with an insured driver.
What’s in Store in 2024
Will insurance rates continue to rise into 2024 and beyond, or will they start to plateau or even come down? The outlook seems mixed. While some experts believe the worst is over, others think that high repair costs and big payouts from climate damage will continue to rise. While it’s impossible to say what will happen, it’s best to be prepared for the worst and do what you can to mitigate those higher premiums.
Finding Cheaper Car Insurance Next Year
Thankfully, there are steps you can take to help keep your premiums under control.
One of the easiest and best ways to do this is to shop around and compare auto insurance quotes. Search for more affordable options and take advantage of a changing market every six months or so using a comparison site to get free quotes. The Zebra’s Ross Martin even has a guide to comparing auto insurance quotes to help get you started.
Another way to save a little money is to bundle your home and auto insurance together for a discount. You can even do this if you’re a renter and have renter’s insurance. Having all your insurance under one provider can make life simpler. You might also consider dropping unnecessary coverage and just keeping your liability insurance.
While you’re at it, don’t be afraid to ask your insurer about possible discounts. The average insurance company offers all kinds of discounts, such as good student discounts, no accident reductions, and low-mileage discounts. Most also offer discounts for certain professions: teachers, law enforcement officers, or paramedics. Talk with your insurance provider and see what you might qualify for.
Finally, while it may seem obvious advice, maintain a good driving record. Accidents and traffic violations are not only a potential hazard to life and limb, but they can also send your insurance rates sky-high. Drivers with a clean record often qualify for special discounts as one of the perks of responsible driving.
This article was produced and syndicated by Wealth of Geeks.