How to get a fair share of expensive car insurance

Inflation has caught up with auto insurance consumers, so much so that the average American’s current coverage isn’t enough to cover rising costs in key areas like medical bills and vehicle repairs.

Financial analysts call the syndrome “car inflation,” which defines the combined (and growing) costs of owning a vehicle out of the lot, including car insurance, car repair and maintenance costs, and medical expenses after being involved in a car accident.

Auto insurance is one area that could make a difference for vehicle owners.

“Higher medical bills and vehicle repair costs mean your insurance coverage may be insufficient to adequately protect your finances in an inflationary environment,” said Cate Deventer, analyst at “As premium increases continue due to inflation and accidents, it may be worth considering increasing the limits of your car insurance coverage.”

The trick, Deventer said, is to be financially protected by reducing your risk of payouts in the event of an accident.

“While the goal is not to over-insure you and inflate your premiums unnecessarily, the right cover is crucial and can give you the peace of mind you need every time you drive,” said she declared.

Easier said than done

Having the exact auto insurance needed in an inflationary environment, but reducing insurance costs is not cruising the pavement.

This is especially the case with the high cost of vehicle accessories included in a typical car insurance policy.

This from Deventer.

Medical costs have increased: Consumer Price Index data shows that costs for medical care services increased by 5.1% between July 2021 and July 2022.

“Because medical expenses cost more, your coverage limits won’t go that far,” Deventer noted. “Because different types of auto insurance coverage pay for medical expenses in the event of an accident, you may be underinsured.”

Vehicle prices have increased: Inflation has also pushed up the cost of new vehicles by 10.4% and the cost of used vehicles by 6.6% since July 2021.

“Cars are getting more expensive, which means higher repair and replacement costs,” she added. “Due to the rising cost of vehicles and parts, your policy’s coverage limits may be insufficient, especially if you have lower liability limits.”

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Getting to the Car Insurance Sweet Spot

The good news? Getting the vehicle cost coverage you need right now probably isn’t as expensive as you think.

“Your car insurance is an integral part of your overall financial health, and the amount of coverage you have could be the difference between financial malaise and financial devastation,” Deventer said. “Still, the premium increase for higher limits may not be too large. For example, moving from state minimum liability limits to 50/100/50 coverage is a 5% increase, or $7 per month.

One way to get the most out of your car insurance money is to direct the money where it will do the most good.

“Consumers who have comprehensive and collision coverage on their policies are well protected against rising repair costs because they are limited to paying only their deductible to repair their vehicles, regardless of the total cost of the repairs,” said Ted Olsen, president of Human Capital Development at Goosehead Insurance, a consumer insurance services platform.

The area where consumers would do well to review with their insurance agent is the liability and medical limits of the policy.

“Fortunately, these coverages are the cheapest to upgrade and provide the greatest protection against rising medical and repair costs for accidents where the consumer is responsible for the damage,” Olsen said. “Buying two to three times more liability coverage often only increases the overall premium by 5-10 percent.”

Auto insurance consumers can also look for ways to offset the rising cost of necessary additional coverage simply by making smart insurance decisions.

“In the past, for example, it was affordable to carry very low deductibles on our cars,” Olsen said. “Choosing a higher collision deductible and comprehensive coverages will significantly reduce the price of the policy while still retaining the coverage you need.

Most auto insurers also offer usage-based insurance programs that match premiums to the actual risk of driving activity.

“If you allow them to track your hard braking or your mobile phone use while driving, for example, you may be able to save a lot of money on your premiums just because you adhere to safe driving practices” , Olsen noted.

Olsen’s most sensible advice? Speak to an insurance agent and review your policy annually.

“Staying in the same place for decades isn’t the best way to lower your premiums,” he said. “The market is too dynamic and includes too many factors to assume that there is no better option available elsewhere.”

“Have an independent agent do the shopping for you and walk you through various options to ensure you maximize your protection and minimize the premium burden,” he added.