If your car insurance policy has just been renewed or is about to be renewed, it is likely that your rates will increase more than usual. Many insurers have raised their rates by 6% to 8%, with some insurers raising their rates by double-digit percentages, The Wall Street Journal reported.
But why is this happening? And is there anything you can do to save on your car insurance? GOBankingRates spoke to Josh Damico, vice president of insurance operations at car insurance comparison platform Jerry, to get his perspective.
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Why auto insurance rates are skyrocketing
“There are a number of factors currently driving up auto insurance rates, most of which stem from the effects of the pandemic,” Damico said. “In 2020, the frequency of accidents has dropped and most insurers have decided to waive their annual rate increases, which are around 3% each year.
“Additionally, some carriers were refunding money as a benefit to customers during a difficult financial time for many. Now, almost two years later, people are back on the road and as a result we are seeing an increase in the frequency of accidents. »
Another factor driving up rates is that car repair, replacement and rental costs have all increased.
“The cost a carrier has to pay for a claim, called ‘gravity,’ has increased,” Damico said. “This is due to inflation, record car prices, auto parts shortages, and high prices and labor shortages.”
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If a driver totaled a car today, the insurance company may have to reimburse the customer for the value of the vehicle.
“The value of new and used cars is at record highs and therefore when a carrier assesses the value of a total vehicle, it is much higher than it would have been before,” he said. said Damico. “It forces the carrier to pay more money.”
Also, when a wrecked car is fixable, it costs a lot more to fix.
“Auto parts are in high demand and cost more, and body shops can’t find enough mechanics to hire, driving up labor costs,” Damico said. “All of these factors increase expenses in the event of an accident or vehicle theft, which can lead to higher insurance premiums.”
How to save on car insurance
While rate hikes are pretty much inevitable, there are still steps you can take to save on car insurance.
“Seventy percent of people haven’t renewed their auto insurance policy, which means they may be leaving money on the table,” Damico said. “If you’re not happy with your current rate, a good first step is to shop around. You can do the work yourself by contacting the carriers directly, but it may take some time. The easiest way to compare and buy auto insurance is through an app like Jerry. It is important to remember that you can change insurers at any time. If your rate increases for some reason, you can search for a better rate.
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You should also see if you qualify for any discounts that you are not taking advantage of. This is especially true if you have recently experienced a major life change.
“Did you get married or did you move in with your partner?” You can save money with a wedding discount and a multi-car discount when you merge insurance policies,” Damico said. “Do you work from home now? If so, you can reduce your annual mileage and usage, saving you money on your policy without affecting coverage.
“Even without a major life event, there may be discounts you’re not taking advantage of that can help you save money on car insurance,” he continued. “Most carriers offer discounts based on good driving behavior, which is increasingly tracked and measured via an app on your phone using telematics. You will usually get a discount for signing up for the telematics program, as well as additional savings for good driving behavior without any adverse effects.Also check your car’s safety features as there may be discounts depending on certain safety features.
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