Amid high inflation and car prices, how much more your car insurance could cost – MarketWatch

March 14, 2022 By admin

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Drivers can expect to hit a few speed bumps when it comes to paying their car insurance premium this year. After already rising 12% in 2021,  according to a report from Insurify, premiums are expected to rise another 5% this year. “Many consumers can expect higher rates,” says John McCormick, editorial director at CarInsurance.com, Insurance.com and Insure.com. (You can see the lowest car insurance rates you might qualify for here.)
Rates may continue on this upward trend too, as consumers drive their cars more, explains Michael Giusti, analyst at InsuranceQuotes.com. “When we all went into lockdown, our cars by and large stayed in our driveways. Fewer miles on the road means fewer opportunities for accidents to happen and by extension, lower rates. Now that lockdowns are over, things are largely back to normal and in many cases, more expensive,” says Giusti.
The biggest driver of increasing rates is the cost to replace a totaled vehicle, according to a recent report from InsuranceQuotes.com. With inflation in full swing and shipping and production delays still at play due to the pandemic, Bureau of Labor Statistics data from January indicates new car prices jumped by 12% and used car prices saw a hike of 40.5% from the year prior.
Other factors are at play too. “Increased repair costs, supply chain issues, higher medical costs, bad driving resulting in more severe and frequent accidents as we are at pre-pandemic numbers of cars on the road all affect the cost to insure autos,” says Ruiz. (You can see the lowest car insurance rates you might qualify for here.)
What’s more, the international shortage of semiconductors derailed the auto industry for months, slowing new vehicle productions and inadvertently boosting demand for used cars. Additionally, an increased number of natural disasters in 2021 accounted for more than $105 billion dollars in insured losses, leading insurance companies to raise premiums according to data from the Swiss Re Group, a worldwide provider of reinsurance, insurance and insurance-based risk transfer.
Another reason rates are rising is inflation. “It’s increasing the costs of parts and repairs and another factor is an increase in accidents from the lows seen during pandemic lockdowns,” says McCormick.
To save money on car insurance this year, Ruiz recommends shopping around and comparing deals (you can see the lowest car insurance rates you might qualify for here.), increasing deductibles, dropping comprehensive or collision coverage on older cars and taking advantage of insurer discounts. “Bundle home and auto, [opt in to] safe driving programs, [look for a] safe car rating from the IIHS, seek low mileage discounts, and look for loyalty discounts,” adds Ruiz. 
Another big trend that could potentially save you money is usage-based insurance, which charges policyholders based on how they drive. “Insurers are offering a variety of safe driving incentives including telematic devices [these get installed in your car to monitor driving behavior] and phone apps, pay by mile options and more,” says Ruiz. These programs use onboard sensors, which are connected to the vehicle’s diagnostic port or a smartphone app, to determine things like the number of miles driven, the time of day a vehicle is in use, the number of hard stops and fast accelerations that take place and other variables that could pose risks. (One caveat to consider is that not every state allows for usage-based insurance and drivers need to opt in to be monitored.)
When looking for savings, it’s important to make sure you’re buying the proper amount of insurance. “If you don’t have a lot of assets, or if your vehicle isn’t worth a lot, then it might not make sense to max out your policy limits. That said, make sure you buy enough to protect you and your family,” says Giusti. 
“Don’t forget to ask for discounts. Good students get a bit shaved off their premiums. Military vets can sometimes save and people with good credit can get a discount depending on the policy and state they’re in. But you often only find these discounts by asking what is available,” says Giusti.
As for how much someone can save, a survey from Nerdwallet found that good drivers could save upwards of $400 on a policy by switching, with drivers in some states snagging savings of $1,800 or more.
Of course, how much you can save varies by driving record, age, mileage driven and more. “Shop and compare to find out how much you can save,” says Ruiz. Prices can vary widely within markets depending on which insurer you call, which is why Giusti says, “Don’t take the first quote you get.” By switching insurance companies, he says it isn’t unusual for someone to save several hundred dollars a year just by changing to whom you write your premium check. (You can see the lowest car insurance rates you might qualify for here.)
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Alisa Wolfson is a reporter for MarketWatch Picks.

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