Auto insurance costs have played a significant role in the recent acceleration of inflation rates in March. According to recent data, monthly car insurance prices spiked by 2.7% in March and have skyrocketed by 22.2% year-over-year. This surge in auto insurance costs has been ongoing since December 2021, with an overall increase of 45.8%.
Despite these alarming statistics, auto insurance costs remain a relatively small portion of the consumer price index. However, the high costs for new and used vehicles, which have been at historic levels since the pandemic, coupled with supply chain shortages, mechanic wage increases, and expensive vehicle technology, are all contributing factors to the rise in auto insurance prices.
Replacement and repair costs are also on the rise, largely due to the pricey technologies found in modern vehicles. Insurance companies base their premiums on actuarial loss trends, and in 2022, auto insurers lost an average of 12 cents on every dollar of premium collected.
In response to rising costs, more consumers are turning to usage-based insurance programs as a way to save money. Despite these efforts, overall customer satisfaction with auto insurers has reached a more than 20-year low. However, USAA has managed to rank highest in customer satisfaction among auto insurance companies.
As auto insurance costs continue to climb, it is important for consumers to explore all available options to ensure they are getting the best deal possible. With inflation rates on the rise, it is crucial for individuals to carefully consider their auto insurance needs and shop around for the best rates.
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