From gas prices to grocery costs, it’s almost impossible not to feel the pinch in your wallet these days. Unfortunately, the trend is the same for car insurance and other car expenses. Here are five reasons why you might see an increase in your car insurance bill.
Don’t leave without car insurance
It is essential that you have auto insurance and keep a record of it in your vehicle. It might be tempting to skip the insurance because of the cost. But it’s an expense you shouldn’t skimp on if you’re driving, according to Money Under 30.
The most important reason to buy car insurance is that it is illegal to do without in all but two states. There are always penalties if law enforcement finds you are uninsured. In fact, in some states, you could even face a permanent license suspension or even jail time. It’s not worth the risk.
In the event of a car accident, you will want auto insurance. It doesn’t matter who caused the collision. You still want insurance to manage expenses. Insurance can also protect your other assets in the event of an accident. Insurance can help prevent the other driver from going after your car, home, and bank account for compensation. Finally, car insurance protects you from liability for the medical expenses of your passengers if you are at fault in an accident.
Buying insurance for your car is more than just a legal thing to do. It’s the smart thing to do. Paying that bill can be a pain, but the peace of mind for you and other drivers is worth the investment.
All this to say that car insurance rates could go up. Consider these reasons why you might pay more and plan accordingly.
1. Inflation is real
According to Erie Insurance, the Consumer Price Index (CPI) is up more than 7% since 2020. This is the highest level in over 40 years. So you’re paying about 7% more on all your bills, including car insurance, than a few years ago.
2. The price of auto parts is also increasing
Inflation is hitting the auto industry hard. Although the average increase is 7%, auto parts inflation is closer to 10%. An increase in vehicle parts means your insurance will have to pay more to repair your car. Your insurer will likely pass this price increase on to you by increasing your insurance premiums.
3. Repair costs increased by 20%
Plus, it costs even more to repair your car due to supply chain issues and labor shortages. It costs 20% more today to repair your car than in 2020. Supply chain issues and available labor can also lengthen repair times. This means you could be in rental vehicles longer, putting pressure on your insurance company due to the cost of claims.
4. Cars cost more now
Used car prices are up 27% since 2021. And new car prices are up more than 14%. More expensive cars mean higher car insurance premiums.
5. People are driving more, causing more accidents
People weren’t driving as much in 2020 and 2021 because they were staying home more. This meant less wear and tear on their vehicles and also fewer accidents. Now more motorists are on the road leading to more car accidents. Unfortunately, these accidents are also becoming more serious and result in more deaths. Therefore, the increased risk leads to higher car insurance premiums.
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